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MANU/WB/0172/1981 Equivalent Citation: (1982)26CTR(Cal)17, [1982]137ITR72(Cal) IN THE HIGH COURT OF CALCUTTA Matter No. 389 of 1976 Decided On: 08.07.1981 Appellants: Commissioner of Gift Tax, Central-I Vs. Respondent: Basant Kumar Aditya Vikram Birla Hon'ble Judges/Coram: Sabyasachi Mukharji and Sudhindra Mohan Guha, JJ. Counsels: For Appellant/Petitioner/Plaintiff: B.K. Bagchi and B.K. Naha, Advs. For Respondents/Defendant: R.N. Bajoria, S.K. Bagaria and A.K. Dey, Advs. Subject: Direct Taxation Catch Words Mentioned IN Acts/Rules/Orders: Gift Tax Act, 1958 - Section 2 Cases Referred: Rajagopala Ayyar v. Venkataraman, [1947] 51 CWN 829, AIR 1947 PC 122; Ramchandra v. Seeniathal, ILR [1955] Mad 732; Subbayya v. Ananta Ramayya, [1930] ILR 53 Mad 84; Jairam v. Nathu, [1906] ILR 31 Bom 54; Sundrabai v. Shivnarayana, 1908] ILR 32 Bom 81; Vaikundam v. Kallapiran, [1900] ILR 23 Mad 512; Sadhu Laxmi Sundaramma v. Suryanarayana, AIR 1950 Mad 274; Ramalinga Annavi v. Narayana Annavi, [1922] ILR 45 Mad 489 (PC), [1922] LR 49 IA 168; Guramma Bhratar Chanbasappa Deshmukh v. Mallappa Chanbasappa, AIR 1964 SC 510; V.D. Deshpande v. K.D. Kulkarni, AIR 1978 SC 1791; Anthonyswamy v. M.R. Chinnaswamy Koundan, AIR 1970 SC 223; Devchand C. Shah v. Commissioner of Expenditure-tax, [1970] 78 ITR 534; Thiruvathammal v. Vagunathan, AIR 1952 Mad 479; CGT v. Tej Nath, [1972] 86 ITR 96; CIT v. Ramgopal Rajgarhia, [1980] 123 ITR 693 (Pat); Keshub Mahindra v. CGT, [1968] 70 ITR 1 (Bom); P.J.P. Thomas v. CIT, [1962] 44 ITR 897 (Cal); CGT v. N.S. Getti Chettiar, [1971] 82 ITR 599; M.S.M. Ratnaswami Nadar v. CIT, [1975] 100 ITR 669; CGT v. Chandrasekhara Reddy, [1976] 105 ITR 849; CGT v. RM.S. Ramanathan Chettiar, [1969] 74 ITR 758 (Mad); Alagammai Achi v. Veerappa Chettiar, AIR 1956 Mad 428; Narayana v. Ramalinga, [1916] ILR 39 Mad 587 Case Note: Direct Taxation gift Section 2 of Gift Tax Act, 1958 whether Tribunal right in holding that jewellery and cash given by assessee to daughter of 'karta' of Hindu undivided family (HUF) at time of marriage did not fall within ambit of term 'gift' as defined in Section 2 (xii) unmarried daughter of HUF has right to be
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married out of joint family expenses so there could not be gift Tribunal right in concluding that provisions of Section 2 (xii) not attracted question answered in affirmative.
JUDGMENT Sabyasachi Mukharji, J. 1. This reference under Section 26(1) of the G.T. Act, 1958, poses the following question :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that jewellery, cash and fridge of the value of Rs. 67,744 given by the assessee to Smt. Jayasree Mohta, at the time of her marriage, did not fall within the ambit of the term "gift" as defined in Section 2(xii) of the Gift-tax Act, 1958 ? "
2. The assessee is an HUF. The proceedings out of which this reference arises relates to the gift-tax assessment for the assessment year 1970-71. The gift made by the assessee-HUF during the previous year included the following amounts given to Smt. Jayashree Mohta, daughter of Sri B.K. Birla, karta of the assessee-family, at the time of her marriage. Those were as follows :
Rs.
"Jewellery worth
47,000
C ash
11,000
Fridge
9,744
67,744"
3. The assessee disclosed the value of all the gifts amounting to Rs. 1,33,744 which included this gift of Rs. 67,744. This amount of Rs. 67,744 was claimed as exempt on the ground that these were marriage expenses. The ITO disallowed the claim of the assessee. 4. Being aggrieved by the order of the ITO, the assessee went up in appeal before the AAC. It was contended on behalf of the assessee that an unmarried daughter was entitled to have her marriage expenses met by the HUF and, therefore, there was no question of any gift whatever in the HUF spending these amounts on her marriage. The AAC was of the view that there was no obligation on the HUF to spend on the marriage of the daughter as the daughter was not solely dependent on the HUF. He observed that the marriage expenses were met not by the HUF but by the karta or parents from their individual accounts. The AAC, therefore, upheld the order of the ITO. 5. The assessee went up in appeal before the Tribunal. It was urged before the Tribunal that there was an obligation on the HUF to perform the marriage of the daughters of the family and the amounts spent in the marriage in discharge of this obligation could not amount to a gift, as it would not amount to transfer without consideration. Reliance in this connection was placed on several passages in Mulla's Hindu Law as well as on the decision of the Judicial Committee in the case of Rajagopala Ayyar v. Venkataraman [1947] 51 CWN 829 AIR 1947 PC 122 and relying on this decision, the Tribunal was of the view that the assessee was under a legal obligation to give in marriage Smt. Jayashree Mohta and the expenditure incurred therein amounted to legitimate marriage expenses on Smt. Jayashree
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Mohta. The Tribunal further held that the amounts in dispute did not fall within the ambit of the word "gift" as defined in Section 2(xii) of the G.T. Act, 1958. Therefore, the Tribunal directed the exclusion of Rs. 67,744 from the computation of the value of the gift. Upon these facts, the question, as indicated above, has been referred to this court. 6. It must be mentioned that there is no dispute that the amount was spent by the HUF. It was also not in dispute that Smt. Jayashree Mohta was a member of the said HUF and on the marriage of an unmarried daughter of the said HUF the amount was spent. The Tribunal found that the amount spent was not out of proportion or was not in excess of the estate of the family. The Tribunal also proceeded on the basis that the expenditure incurred was the legitimate marriage expenses of Smt. Jayashree Mohta. The question is, in these circumstances, can it be said to be a case of gift in terms of Section 2(xii) of the G.T. Act, 1958. The position of a daughter to have her marriage expenses met out of the joint HUF is clear in the exposition of law in Mulla's Hindu Law and we may refer to the observations in Mulla's Hindu Law, 14th Edn., where at p. 395, under art. 304(2), dealing with the property available for partition, it states :
" (2) Marriage expenses, etc., after a suit for partition.--As to the marriage expenses of male members of the family it has been held by the Judicial Committee (Ramalinga v. Narayana [1922] LR 49 IA 168) reversing a decision of the Madras High Court (Narayana v. Ramalinga ILR [1916] Mad 587 36 IC 428), that since the institution of a suit for partition by a member of a joint family effects a severance of the joint status of the family, a male member of the family who is then unmarried is not entitled to have a provision made on partition for his marriage expenses, although he marries before the decree in the suit is made. The case, however, of an unmarried daughter stands on a different footing. Her right to maintenance and marriage expenses out of the joint family property is in lieu of a share on partition ; provision should accordingly be made for her marriage expenses in the decree (Rajagopala Ayyar v. Venkataraman [1947] 51 CWN 829). It is only for the marriage expenses of the father's daughters or sisters that provision should be made out of the joint family property. The marriage expenses of the son's daughters form only the liability of his branch and not of the whole joint family unlike the case of the father's daughters (Ramchandra v. Seeniathal ILR [1955] Mad 732). Thus, if A has a son S and a daughter D by one wife, and a son S2 and a daughter D2 by another wife, and S brings a suit for partition, and D2 is married after the institution of the suit, one-third of her marriage expenses should be deducted out of his one-third share and as regards one-third of the marriage expenses of D his one-third share in the property may be charged with such expenses. But S is not liable for the marriage expenses of his brother's (S2's) daughter, if any, she being the daughter of a collateral. Her marriage expenses should come out of her own father's share (Subbayya v. Ananta Ramayya ILR[1930] Mad 84). The same rule applies to the expenses of betrothal ceremonies of daughters. As regards the expenses of the thread ceremony of the members of the family it has been held that provision should be made for them on partition (Jairam v. Nathu ILR[1906] Bom 54). As to marriage expenses while the family is joint, see Article 440 below."
7. As mentioned hereinbefore, the aforesaid observations deal with the marriage expenses at the time of partition or after a partition suit had been filed. But Article 440 at p. 518 of the said book deals with marriage expenses when the family is joint and it will be instructive to refer to the said exposition in Mulla's Hindu Law which states as follows :
" 440. Marriage expenses.--In the case of a joint family governed by the Mitakshara law, the joint family property is liable, while the family is still joint, for the legitimate marriage expenses of male members of the family Sundrabai v. Shivnarayana ILR(1908] Bom 81) and also of the daughters of male members of the family (Vaikundam v. Kallapiran ilr [1900] Mad 512). The decision in Subbayya v. Anantha Ramayya ilr [1930] Mad 84 implies that a father in possession of a joint family property is under a legal obligation to get his daughter married. It follows that if a father so in possession neglects his duty, the mother may perform it and recover the expenses from her husband. When there is no joint family property in the hands of the father there is no legal obligation on his part to marry his daughter and bear the expenses of marriage. It is doubtful also whether the
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marriage of an infant girl could be brought under the head of 'necessaries' within the meaning of Section 68, Indian Contract Act (Sadhu Laxmi Sundaramma v. Suryanarayana, MANU/TN/0119/1950 : AIR1950Mad274 . On the other hand, the proposition of law laid down in Sundari Ammal v. Subramania Ayyar ILR[1902) Mad 505 that under the Hindu Law, a father is under no legal obligation to get his daughter married appears to have been stated too broadly. The obligation may not exist when the father is not a member of a joint family and has no ancestral property. The texts enjoin the payment of expenses of sanskaras or sacraments out of the family property. The marriage is a sanskara and its expenses, therefore, are to be provided for out of the joint family property. A debt contracted for the marriage of a coparcener or the daughter of a deceased coparcener in a joint Hindu family is a debt contracted for a family purpose and, therefore, for the benefit of the family. See arts. 224 and 427. As to expenses of marriage after the institution of a suit for partition, see Article 304(2). As to the power of a widow to provide for the marriage expenses of her daughter out of her husband's estate, see Article 181B(iv)."
8. In this connection, it may not be inappropriate to refer to the observations of the Madras High Court in the decision mentioned hereinbefore, that is to say, the observations of the court in the case of Subbayya v. Atlanta Ramayya ILR [1930] Mad 84 . It was observed that in a suit for partition, instituted by a Hindu governed by the Mitakshara law, against his father and his step-brother, the father claimed a provision for the marriage expenses of his daughters, one of whom was married subsequent to the suit and before the decree and two others Were unmarried, and the plaintiff had contended that he or his share in the family property was not liable therefore after the disruption of the coparcenary. Mr. Justice Ramesam and Mr. Justice Reilly held that the right of the daughter to her marriage expenses and maintenance was based on her right to or interest in the joint family property and was not based on the natural obligation of a father to maintain his children. Under this, according to their Lordships, the obligation of the family property was not affected by the partition between the father and his sons, but the son's share, on partition, was liable for the marriage expenses of the daughter of the father in proportion to the son's share in the property divided, and, on the other hand, for the marriage expenses of the daughter of the son, if any, the share of the father or of a collateral after partition was not liable and consequently the plaintiff should pay his father his one-third share of the sister's marriage expenses incurred after suit and his one-third share in the property should be charged with onethird of the expenses of the marriages of his unmarried sister. There, the majority of the learned judges explained the full implication of the observation in the case of Ramalinga Annavi v. Narayana Annavi ILR [1922] Mad 489 . The position, therefore, follows that the legitimate marriage expenses of the daughters of the joint HUF will have to be met out of the joint HUF provided the family has the fund. If that is a right given to the daughter belonging to the joint Hindu family then the payment of money in discharge of that right by the karta can by no stretch of imagination be described as either a transfer or gift in terms of Section 2(xii) of the G.T. Act. We will, however, come to the actual definition in the section immediately. In this connection, it would be appropriate to refer to the observations of Mulls, appearing at p. 302 under Article 243 of the same book which deals with alienation of property in case of legal necessity and Clause (c) of Article 243 deals with marriage expenses of male coparceners and also of the daughters of the coparceners. Therefore, it again re-emphasises the point that marriage of daughters of the coparceners, that is to say, the unmarried daughter of the members of the joint HUF, if there be alienation on the occasion of marriage, would be alienation for the legal necessity and would be a valid alienation of the property under the Hindu law. We may also refer, in this connection, to the observations appearing at p. 425 under art. 333 where it dealt with a suit for partition, parties to the suit and what property it should comprise. Reliance was placed on the observations of the Supreme Court in the case of Guramma Bhratar Chanbasappa Deshmukh v. Mallappa Chanbasappa, MANU/SC/0252/1963 : [1964]4SCR497 . There, several questions came up for consideration before the Supreme Court. The questions were when there could be a valid adoption, under what circumstances the manager of a joint Hindu family had power of alienation, the right of alienation of the manager and gift to a stranger. But one of the main questions that came up for consideration was the right of the father to alienate the property to make a gift in favour of the daughter or sister by way of a reasonable provision for her maintenance. There, the Supreme Court dealt with the position under the Hindu law and referred to verses 27, 28 and 29 in Chap. I of the Mitakshara law which described the limitation placed on a father in making a gift of an ancestral estate. The Supreme Court thereafter observed that they did not expressly deal with the right of a father to make a provision for his daughter by giving her some family property at the time of her marriage or subsequently. That right, according to the Supreme Court, was defined
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separately by Hindu law texts and evolved by a long catena of decisions based on the said texts. Then, the Supreme Court referred to the relevant decisions in para. 16 of the said judgment at pp. 517-518 of the report. The Supreme Court thereafter went on to observe that it was manifest that except the decision of a learned single judge of the Bombay High Court, all the decisions, according to the Supreme Court, on the subject, recognised the validity of a gift to a reasonable extent of a joint family property to a daughter under varying circumstances. The Supreme Court thereupon at para. 18 at p. 519 of the report observed as follows :
"18. The legal position may be summarised thus : The Hindu law texts conferred a right upon a daughter or a sister, as the case may be, to have a share in the family property at the time of partition. That right was lost by efflux of time. But it became crystallised into a moral obligation. The father or his representative can make a valid gift, by way of reasonable provision for the maintenance of the daughter, regard being had to the financial and other relevant circumstances of the family. By custom or by convenience, such gifts are made at the time of marriage, but the right of the father or his representative to make such a gift is not confined to the marriage occasion. It is a moral obligation and it continues to subsist till it is discharged. Marriage is only a customary occasion for such a gift. But the obligation can be discharged at any time, either during the lifetime of the father or thereafter. It is not possible to lay down a hard and fast rule prescribing the quantitative limits of such a gift as that would depend on the facts of each case and it can only be decided by courts, regard being had to the overall picture of the extent of the family estate, the number of daughters to be provided for and other paramount charges and other similar circumstances. If the father is within his rights to make a gift to a reasonable extent of the family property for the maintenance of a daughter, it cannot be said that the said gift must be made only by one document or only at a single point of time. The validity or the reasonableness of a gift does not depend upon the plurality of documents but on the power of the father to make a gift and the reasonableness of the gift so made. If once the power is granted and the reasonableness of the gift is not disputed, the fact that two gift deeds were executed instead of one cannot make the gift any the less a valid one."
9. Learned advocate for the revenue, basing on the aforesaid observations of the Supreme Court, sought to urge that originally the texts gave the daughter or sister a share in the joint Hindu family property but that right was gradually lost and it became thereafter a moral right to maintain the daughter according to the financial and relevant circumstances of the family. It was sought, therefore, to be urged on behalf of the revenue that though there might be some moral obligations on the karta of the joint Hindu family to incur certain expenses or give a daughter of the family in marriage, there was no legal right for the daughter to obtain marriage expenses nor was there any legal obligation on the karta to incur such expenses. We are, however, unable to accept this position. As we have noted, the Supreme Court, in the text quoted in the aforesaid decision, observed : How patent the obligation of the joint Hindu family was to get the daughter of the family married in the manner commensurate with the family status and it is well settled in Hindu law that wherever the laws of India admit the operation of a personal law, the rights and obligations of a Hindu are determined by the Hindu law, in its traditional law. The law as understood by the Hindus, is a branch of dharma. Its ancient framework is the law of the Smritis. This position is amply clarified in the introduction to Mulla's Hindu Law, as referred to hereinbefore. 10. As a matter of fact, this traditional concept of Hindu law has not only not been altered but has been recognised by the Hindu Adoptions and Maintenance Act, 1956, which, inter alia, defines "maintenance" under Sub-section (3)(b) as "in the case of unmarried daughter, also the reasonable expenses of and incidental to her marriage ". The said statutory law imposes upon the karta or the father, as the case may be, the obligation of maintaining the daughter which as we have mentioned hereinbefore includes the obligation to incur expenses on the occasion of the marriage. This position was further clarified by the subsequent judgment in the case of V.D. Deshpande v. K.D. Kulkarni, MANU/SC/0409/1978 : [1979]1SCR955 , where it was observed that where a father was the karta of a joint Hindu family and the debts were contracted by the father in his capacity as manager and head of the family for family purposes, the sons as members of the joint family were bound to pay the debts to the extent of their interest in the coparcenary property. It was further observed that as the loan was borrowed for the purpose improving joint family lands, the loan would ipso facto be for legal necessity. It was observed at para. 7 referring to Mulla's Hindu law as follows (at p. 1794) :
"Where a father is the karta of a joint Hindu family and the debts are contracted by the father in his capacity as manager and head of the family for family purposes, the sons as members of the joint family
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are bound to pay the debts to the extent of their interest in the coparcenary property. Further, where the sons are joint with their father and the debts have been contracted by the father for his own personal benefit, the sons are liable to pay the debts provided they were not incurred for illegal or immoral purposes. This liability arises from an obligation of religion and piety which is placed upon the sons under the Mitakshara law to discharge the father's debts, where the debts are not tainted with immorality. This liability of the sons to pay the father's debts exists whether the father be alive or dead (para. 290, Mulla's Hindu Law, 14th Edn., p. 354). A further requirement is that for an effective partition of a Mitakshara joint Hindu family a provision for the joint family debts should be made. In order to determine what property is available for partition, provision must first be made for joint family debts which are payable out of the joint family property, personal debts of the father not tainted with immorality, maintenance of dependent female members and of disqualified heirs, and for the marriage expenses of unmarried daughters. This must be so because partition is of joint family property and if joint family debts are repaid before the partition only the residue would be available for partition. Therefore, if partition is effected before paying the debts, provision to pay the debts should be made so as to determine the residue available for partition."
11. Therefore, the marriage of dependent family members and on such occasion incurring legitimate expenses were recognised in the aforesaid passage referred to hereinbefore. At paras. 14 and 14A at pp. 1796 and 3 797, the Supreme Court reiterated this position and referred to the previous decision of the Supreme Court in the case of Anthonyswamy v. M.R. Chinnaswamy Koundan, MANU/SC/0283/1969 : [1970]2SCR648 . At p. 1801 of the report AIR 1978 SC the Supreme Court noted that in Hindu law two seemingly contrary but really complementary principles are there, one the principle of independent coparcenary rights in the sons which was an incident of birth, giving to the sons a vested right in the coparcenary property and the other the pious duty of the sons to discharge their father's debts not tainted with immorality or illegality, which laid open the whole estate to be seized for the payment of such debts. One of the pious obligations of the joint Hindu family in which there is an unmarried daughter is to get the daughter married and to incur legitimate expenses for such occasion. Such pious obligation, a concept of the Hindu law, has not only not been modified but strengthened by the subsequent legislation as we have mentioned hereinbefore. Reference in this connection may also be made to the decision of the Mysore High Court in the case of Devchand C. Shah v. Commissioner of Expenditure-tax MANU/KA/0043/1966 : [1970]78ITR534(KAR) , where the Division Bench of the Mysore High Court observed that the expenses for the marriage of a daughter of a Hindu family were a legitimate charge on the family estate. In the case of Rajagopala Ayyar v. Venkataraman [1941] 51 CWN 829 , the Judicial Committee observed that the right of an unmarried daughter to maintenance and marriage expenses out of the Hindu joint family property was in lieu of a share on partition. Provisions should accordingly be made for her in a decree for partition. It was further observed that when the marriage oi an unmarried daughter had already taken place with the money supplied by her mother there was no ground for refusing reimbursement. Therefore, both the legal as well as the moral obligation of a joint family to incur expenses on the occasion of the marriage of an unmarried daughter is recognised in Hindu law as enunciated by the aforesaid decision of the Supreme Court. The same position would more or less be apparent if we refer to the observations of the learned single judge of the Madras High Court in the case of Thiruvathammal v. Vagunathan, MANU/TN/0199/1952 : AIR1952Mad479 . There the learned judge observed that the father had a legal obligation to meet the marriage expenses of his daughter if it was. shown that there was a joint family property, but if there was no joint family property, the learned judge observed, the obligation of the father was only a moral or natural obligation but not a legal obligation. 12. Our attention was, however, drawn on behalf of the revenue to certain observations in the case of CGT v. Tej Nath MANU/PH/0258/1971, where the Full Bench of the Punjab and Haryana High Court observed that a gift by the karta of an HUF of any portion of the family property, whether to other coparceners or to strangers, was void per se and not merely voidable and, therefore, there would be no gift within the meaning of the G.T. Act, which would be liable to gift-tax. There, however, the court was not dealing with a gift on the occasion of a marriage. Mr. Justice D. K. Mahajan observed at p. 104 of the report that in the instant case before their Lordships the gift to the daughter was not made at or about the time of her marriage. Therefore, whether a gift on other occasions would be a valid gift or would be liable to attract the provisions of the G.T. Act or not is not a question with which we are concerned. 13. Reliance was also placed on certain observations in the case of CIT v. Ramgopal Rajgarhia MANU/BH/0080/1979 : [1980]123ITR693(Patna) where it was observed that a Hindu father or other managing member had power to make a gift within reasonable limits of ancestral immovable property for " pious purposes ". In
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case of movable property such a gift need not be made for pious purposes. It could be made out of love and affection. There the court was concerned with a different situation, namely, a gift made to a son and the question was whether such a gift was within reasonable limits. We are not concerned with the same situation in the instant case. 14. Learned advocate for the revenue, however, seriously contended that even if it was not a gift under the Transfer of Property Act it was a gift in view of the language used in Section 2(xii) of the G.T. Act, 1958. In Section 2(xii) of the Act "gift" has been defind as follows:
"2. (xii) 'Gift' means the transfer by one person to another of any existing movable or immovable property made voluntarily find without consideration in money or money's worth and includes the transfer or conversion of any property referred to in Section 4, deemed to be gift under that section."
15. He contended that this was without consideration as there was no obligation. Secondly, he contended that it was not in money or money's worth. It is common case and no contention was urged before us that the amount could be considered to be a deemed gift under Section 4 of the Act. So, we need not consider the implication of Section 4 of the Act. We are, however, unable to accept the contention urged. As we have mentioned before, there was really no question of any gift or transfer because a daughter had a right so long as the family remained joint and had properties to have her marriage expenses met out of the family fund. The karta was meeting that obligation of the family to the daughter. Therefore, there was no question of anybody transferring any amount really or making any gift in the strict sense of the term. The daughter had the right under the law to have her marriage expenses met. In this connection, as some authorities were cited, we will briefly note the same. Our attention was drawn to the case of Keshub Mahindra v. CGT MANU/MH/0040/1968 : [1968]70ITR1(Bom) , the meaning of the expression " consideration in money or money's worth " was explained. What had happened in that case was that the payment was made in discharge of a legal obligation and payment was out of the fund to which the daughter had a share to be reimbursed. This decision is relevant for our present purpose. Reliance was also placed on the observations in the case of P.J. P. Thomas v. CIT MANU/WB/0255/1961 : [1962]44ITR897(Cal) , where it was held that though marriage might be a good and valuable consideration for transfer of property to a lady who agreed to marry the transferor, since it was not possible to determine the adequacy of such consideration, the marriage could not be regarded as an adequate consideration within the meaning of Section 16(3)(a)(iii) of the Indian I.T. Act, 1922. These observations, in our opinion, were made entirely in a different context and have no relevance to the present case. 16. Similarly, our attention was drawn to the observations of the Supreme Court in the case of CGT v. N.S. Getti Chettiar MANU/SC/0249/1971 : [1971]82ITR599(SC) , where it was held that partition of a property would not amount to a gift. Learned advocate for the revenue is absolutely right. But in this case there was no question of partition and the principle behind that decision of the Supreme Court was as to what a co-sharer was getting in lieu of his share and there was no question of any transfer by anybody to anybody, else. That principle, in our opinion, would be against the contentions of the revenue. Reliance was also placed on certain observations in the case of M.S.M. Ratnaswami Nadar v. CIT MANU/TN/0332/1973 : [1975]100ITR669(Mad) . There also the Madras High Court was dealing with the adequacy of the consideration under Section 64(iii) of the I.T. Act, 1961, which was similar to Section 16(3)(a)(iv) of the Indian I.T. Act, 1922. We are not concerned with the said controversy in the Instant case. Reliance was also placed on certain observations in the case of CGT v. Chandrasekhara Reddy MANU/AP/0174/1976 : [1976]105ITR849(AP) where the Andhra Pradesh High Court observed that a gift by a father or mother or other guardian in discharge of a moral obligation would not attract the provisions of the G.T. Act. 17. Learned advocate for the assessee also drew our attention to the observations in the case of CGT v. RM.S. Ramanathan Chettiar MANU/TN/0292/1969 : [1969]74ITR758(Mad) , where it was held that the expression " money's worth " in Section 2(xii) of the G.T. Act, 1958, had a wide connotation and was not necessarily to be understood in the strict context of money in specie but that which would eventually or in the ultimate analysis or result be reduced to or converted into money. There, in a partial partition of the family, provision was made for the payment of an amount to the wife of the karta. It was held that such consideration was money's worth and the payment was not a gift. As we have held, being an unmarried daughter of the Hindu family, the daughter has a right to be married out of the joint family expenses, there cannot be any gift. This only strengthens that conclusion and this conclusion is also corroborated by the Madras High Court in the case of Alagammai Achi v. Veerappa Chettiar, AIR 1956 Mad 428.
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18. In the aforesaid view of the matter, we are of the opinion that the Tribunal was right in its conclusion that the provisions of Section 2(xii) were not attracted and the question must, therefore, be answered in the affirmative and in favour of the assessee. 19. In the facts and circumstances of the case, there will be no order as to costs. Sudhindra Mohan Guha, J. 20. I agree. Manupatra Information Solutions Pvt. Ltd.
MANU/AP/0634/2001 Equivalent Citation: 2001(6)ALD143, 2001(2)AnWR664 IN THE HIGH COURT OF ANDHRA PRADESH AT HYDERABAD A.S. No. 3025 of 1982 and Transferred A.S. Nos. 3519, 3520 and 3521 of 1985 Decided On: 13.03.2001 Appellants: Veeramallayyagari V. Sitaram Vs. Respondent: Payala Chandrasekhar, Minor Guardian Payala Siddaiah and Ors. Hon'ble Judges/Coram: V.V.S. Rao, J. Counsels: For Appellant/Petitioner/Plaintiff: K.V. Reddy, Adv. For Respondents/Defendant: K.F. Baba, R. Vijayanandan Reddy, R. Venugopal Reddy and R. Vijayanandan Reddy, Advs. Subject: Family Subject: Law of Evidence Catch Words Mentioned IN Acts/Rules/Orders: Hindu Law ;Code of Civil Procedure, 1908 - Order 6 Rule 4; Hindu Succession Act ;Indian Succession Act, 1925 Section 30, Indian Succession Act, 1925 - Section 59, Indian Succession Act, 1925 - Section 63; Indian Evidence Act, 1872 - Section 67, Indian Evidence Act, 1872 - Section 68; Indian Contract Act - Section 25 Cases Referred: Appalaswami v. Suryanarayanamurti, AIR 1947 PC 189; Bhagwati Prasad v. Rameshwari Kuer, AIR 1952 SC 72; Bharat Dharma Syndicate v. Harish Chandra, AIR 1937 PC 146; Bhishundeo v. Seogeni Rai, AIR 1951 SC 280; H. Venkatachala v. B.N. Thimmajamma, AIR 1959 SC 443; Indu Bala v. Manindra Chandra, AIR 1982 SC 133; Kalyan Singh v. Chotti, AIR 1990 SC 396; Mudigowda v. Ramachandra, AIR 1969 SC 1076; Narayanan v.
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Official Assignee, Rangoon, AIR 1941 PC 93; Purnima Devi v. Khagendra Narayan, AIR 1962 SC 567; Raghavamma v. Chenchamma, AIR 1964 SC 136; Raj Kumar Deen v. A.S. Din, 1996 (4) ALD 651; Ramchandra v. Champabai, AIR 1965 SC 354; S. Udayabhaskara Rao v. V.V. Kanaka Durga Rao, 1955 (2) ALT 534; Scot v. United States, (1870) 79 US 577, 20 Law Ed. 438; Shashi Kumar v. Subodh Kumar, AIR 1964 SC 529; Subbayya v. Sitaramamma, 1958 (2) An. WR 59; V.S. Mane v. R.V. Ganeshkar, AIR 1995 SC 2086; V.S. Vishwavidyalaya v. Rajkishore, AIR 1977 SC 615 Case Note: (i) Family - status of ancestral property - Hindu male inherited property from ancestors property to be considered as joint family property subsequently born sons and grandsons having equal shares in inherited property - interest of son is independent of father - held, property is co-parcenary property liable to be divided.
(ii) Validity of will - validity of will challenged on grounds of fraud burden of proof is on person who challenges will test of satisfaction of judicial conscience needs to be satisfied - registration of will not sufficient to establish validity of will - held, will can not be treated as last testament of deceased and cannot be given effect to.
JUDGMENT 1. In the Appeal Suit as well as Transferred Appeal suits, the appellants are aggrieved by the common judgment and the decrees dated 11.11.1981 in four different suits. It is convenient to dispose of all the four appeals by this common Judgment. 2. A.S.No.3025 of 1982 (which may be treated as main appeal) arises against the Judgment and decree in O.S.No.1 of 1977 (which is the main suit) on the file of the Court of Subordinate Judge, Madanapalle and Tr. Appeal Nos.3519, 3520 and 3521 of 1985 arise against O.S.Nos.32 of 1978, 30 of 1978 and 32 of 1978 respectively on the file of the said Court. All the four suits are concerned with all or some of the items of the properties owned by one Payala Kondappa (also described as kondaiah) of Somula village near Madanapalle, Chittoor district. The items of properties include dry lands, wet lands as well as house site. Alt the parties in all the suits are closely related either by birth in the same family or by marriage. During the pendency of the suits. Kondappa died. His second wife Mallamma who is the first plaintiff in the main suit also died. The death of these two has given scope to the learned counsel for the parties to raise new grounds which were not pleaded, proved or raised before the trial Court properly nor raised in these appeals. 3. Be that as it may, before noticing the pleadings, it is convenient to notice the relationship of the parties. One Payala Kondaiah had some agricultural properties viz. coconut, mango, lemon and beetle leaf plantations in Somula village. He had two sons - Payala Kondappa and Payala Siddappa. The brothers lived jointly and even jointly purchased some properties after the death of their father. Kondappa married one Atcliamma and through her he had a daughter by name Parvatamma. After the death of Atcliamma, Kondappa married Mallamma and through Mallamma he begot Chandrasekhar and Reddemma. The marriages of the daughters - Parvatamma and Reddemma - were performed. Reddemma was given in marriage to one Veeramallaiahgari Sitaram. The younger brother of Kondappa viz., Siddappa had two sons by name Sitaramaiali and Kodandaramaiah. Payala Mallamma and her son Chandrasekhar filed suit for partition being O.S.No.1 of 1977 adding Kondappa (Dl). Sitaram (D2). Seetharamaiah (D3). Kodandaramaiah (D4), Parvatamma (D5) and Reddemma (D6). Sitaram filed a suit being O.S.No.757 of 1976 on the file of the Principal District Munsif, Punganur which was later transferred and numbered as O.S.No.103 of 1978 on the file of the Subordinate Judge's Court, Madanapalle. This suit is for perpetual injunction restraining Kondappa from interfering with the possession of the lands, which were allegedly demised to Sitaram under a registered lease deed dated 29.3.1976. The third suit 0 S.No 30 of 1978 by Kondappa
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against Sitaram and his brother Krishnamurthy is for cancellation of the lease deed made in respect of items 3 to 10 of the suit schedule properties and a sale deed dated 27-3-1976 in respect of item No.2 which is a house site, on the ground of fraud and misrepresentation. The fourth suit i.e. O.S.No.32 of 1980 is filed by Reddemma, the daughter of Kondappa through his second wife for partition of 1/6th share in all the properties left behind by Kondappa. 4. The parties shall be referred to as they are arrayed in O.S No 1 of 1977. In A.S.No.3025 of 1982, Tr.A.S.Nos.3520 of 1985 and 3521 of 1985. Sitaram is the appellant who is the second defendant in O.S. No.1 of 1977. Whereas Reddemma sixth defendant in O.S No.1 of 1977 filed Tr.A.S.No.3519 of 1985. Pleadings in A.S.No.3025 of 1982: 5. In the suit O.S.No.1 of 1977 Mallamma, the plaintiff and minor plaintiff. Chandrasekhar pleaded as follows. The plaint schedule properties, items 3 to 9 (agricultural properties) item No 1 (house) item 2 (house site admeasuring 4 1/2 cts.) are joint and undivided properties of Kondappa, the first defendant. The first defendant had two sons Reddeppa and Chandrasekhar and one daughter Reddemma. The first son Reddeppa died when he was 19 years and as per Hindu Succession Act all the properties that may have fallen to the share of Reddeppa devolved to his mother, the first plaintiff. As such, the first plaintiff and the first defendant who are enjoying the properties of the latter are entitled to 1/3rd share each because they are ancestral and joint family properties and acquired by the first defendant out of ancestral properties. The first defendant became disabled and the first plaintiff is supervising the affairs of the family including cultivation. Kondappa installed oil engine to the well in the agricultural lands and cultivating paddy. Taking advantage of misunderstandings between the first plaintiff and the first defendant, the second defendant who is the husband of the sixth defendant instigated the first defendant to keep the family jewellery and cash with the second defendant. As the second plaintiff is a minor and the first plaintiff is a woman, defendants 1 and 2 colluded with each other. The first defendant without there being any legal necessity executed a lease deed in respect of the plaint schedule properties in favour of the second defendant for a lease amount of Rs.5,000/- per year though the properties will yield more than Rs.5,000 or Rs.6,000/- per annum. The lease deed is not intended to be acted upon, that it was not acted upon and in any event the same is not binding on the plaintiffs. As the action of the first defendant is adverse to the interest of the plaintiffs, they filed the suit for partition. During the pendency of the suit, the first plaintiff died and Siddappa the younger brother of the deceased Kondappa was appointed as guardian of the minor second plaintiff as per the order dated 9-11-1979 in I.A.No.778 of 1979. Kondappa also died on 24-111979. therefore, an amendment was sought and ordered in the plaint to the effect that after the death of Mallamma and Kondappa, the minor plaintiff is entitled to 11/18th share whereas sixth defendant is entitled to 5/18th share and Parvatamma 2/ 18th share. Defendants 2 and 3 were made parties as Kondappa allegedly executed a will dated 1311-1979 bequeathing his share in the property to the second plaintiff and defendants 3 and 4 equally. 6. The first defendant (Kondappa) filed a written statement. He denied any collusion with the second defendant. He further stated that while he was in an unsound state of mind, the second defendant fraudulently got the lease deed executed exerting undue influence, that the consideration for the lease is disproportionate when compared with the minimum yield from the agricultural land which is Rs.10,000/-, that he has not delivered possession of the lands to the second defendant and that he has no objection for partition of suit schedule property giving 2/third share to the plaintiffs. 7. The second defendant who is the husband of sixth defendant filed a written statement as follows. The plaintiffs and the first defendant are members of Hindu joint family. The first defendant himself was managing the joint family properties. The first plaintiff is not looking after the affairs and she never managed the plaint schedule property which include agricultural land, coconut, mango, lemon and beetle leaves gardens and soap nut bushes. There are misunderstandings between the plaintiff's and the first defendant. The first defendant as manager of the joint family, for legal necessities leased out items 3 to 9 of plaint schedule property by a registered lease deed dated 2-3-1975 to him for ten years at the rate of Rs.5.000/- per year and put him in possession on the same day. Since then he is in continuous possession of items 3 to 9 of plaint schedule property and raising crops thereon. The first defendant in collusion with the first plaintiff tried to interfere with the peaceful possession of the land and therefore, he filed O.S.No.757 of 1976 on the file of the Court of the District Munsif. Punganur for perpetual injunction and the said Court granted interim injunction in I.A.No.818 of 1976. Therefore, the first defendant in collusion with the plaintiffs got O.S.No.1 of 1977 filed for partition. It is not correct to say that the lands will fetch more than Rs.6.000/- per
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year. The plaintiffs are aware of the lease deed executed by the first defendant in favour of the second defendant as there is a sale deed in respect of item No.2 and hence they are estopped from questioning the lease deed and the sale deed. The plaintiffs never raised any crops after execution of lease deed in favour of the first defendant and the first defendant acted upon lease deed and sale deed by putting the second defendant in possession The first defendant executed sale deed on 27-3-1976 for proper and valid consideration and put the second defendant in possession of the property. The plaintiffs are not entitled to question the same as the sale deed is binding on them The second defendant is not concerned with the division and partition of the property which is between the plaintiffs and the first defendant. The second defendant also filed additional written statement on 8-9-1980 inter alia stating that defendants 3 and 4 are not necessary and proper parties to the suit, that they have no right interest or title in the suit property that defendants 3 and 4 are the sons of the guardian and next friend of the minor plaintiff at whose instance defendants 3 and 4 are made parties that the next friend of minor plaintiff has got adverse interest against the minor second plaintiff, that while the first defendant was on death bead and when he was not in a sound state of mind, the next friend of the minor second plaintiff obtained a will bequeathing his share to defendants 3 and 4, that the sixth defendant filed a suit in O.S.No.30 of 1980 questioning the said document and that the shares mentioned in the plaint are not correct and that the plaintiffs are entitled to 11/18th share. 8. The third defendant is the son of the younger brother of Kondappa. He filed a written statement inter alia stating that Kondappa executed registered will on 13-11-1979 in a sound disposing state of mind voluntarily out of affection in view of the services rendered by him during his old age so as to defray the expenses of the treatment. Under the Will, Kondappa discharged the property into three equal shares giving one share each to the second defendant and defendants 3 and 4. After the death of Kondappa defendants 3 and 4 became entitled to the property left behind Kondappa as per the will dated 13-11-1979. Therefore, the 2/3rd share may be ordered to be partitioned in favour of defendants 3 and 4. 9. The fifth defendant, as noticed above, is one Chinna Mallappagari Parvatamma, who is daughter of Kondappa through his first wife Mallamma. In her written statement she denied the allegation that the plaint schedule properties are joint family properties. She states that the plaint schedule properties are self acquired properties of Kondappa and they are not ancestral properties. She is not aware whether the first defendant colluded with the second defendant and registered a lease deed in favour of the latter. She has no objection for partition of the properties giving a due share to her. She is also not aware of the Will executed by Kondappa. Being the daughter of the first defendant she is entitled to share the property acquired by Kondappa and therefore, she prayed for allotment of her share. 10. The sixth defendant who is the wife of the second defendant also filed a separate written statement. In her written statement she stated that the plaintiffs are not entitled to a share as claimed in the plaint nor the first plaintiff is not entitled for 1/3rd share. Though she is not aware of her share, she is also entitled for share in the property as the first defendant is her father. When the first defendant was taking medical treatment, the guardian of the minor second plaintiff by fraud and misrepresentation and undue influence obtained the Will without consent and knowledge of the first defendant, that the first defendant was not in a state of understanding things properly that she filed O.S.No.32 of 1980 for partition and the contents of the plaint may be read as part and parcel of the written statement of the sixth defendant. Based on the pleadings, the trial Court framed the following issues for trial.
1. Whether the suit properties are the separate properties of the first defendant? 2. Whether the defendants are liable for payment of the suit costs to the plaintiff? 3. Whether the suit properties are not the joint family properties of the first defendant? 4. Whether defendants 3 and 4 are entitled to any share in the suit properties? 5. Whether the minor second plaintiff's next friend has no adverse interest against the minor second plaintiff and whether he played fraud upon in knocking away the share of the heirs of the deceased first defendant? 6. Whether the alleged Will obtained by the next friend of the minor second plaintiff in favour of 3 and 4 defendants is not vitiated by fraud misrepresentation and undue influence?
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7. Whether the defendants 3 and 4 are entitled to any share in the suit lands? 8. To what relief?
Pleadings in Tr.A.S.No.3519 of 1985: 11. This appeal arises against O.S.No.32 of 1980. The suit was filed by the sixth defendant in 0. S. No. 1 of 1977 as informa pauperis. In the plaint, she alleged that the plaint schedule properties are the ancestral and joint family properties of the deceased Kondappa, that the schedule properties fell to the share of Kondappa under a registered partition deed dated 7-6-1977, that after the death of Kondappa, she and her sister Parvatamma and brother Chandrasekhar (plaintiff No.2 and defendant No.5 in O.S.No.1 of 1977) succeeded to his property, that she is entitled to 1/6th share, that Parvatamma is entitled to 1/6th share that Chandrasekhar is entitled to 4/6th share and that the joint Possession and enjoyment is detrimental to the interest of the plaintiffs. Her further case is as follows. While Kondappa was sick and bedridden, Siddappa and his son. Sitaramaiah took Kondappa to Kalikiri for medical treatment and at the Sub-Registrar's Office at Kalikiri, they played fraud and obtained a Will by misrepresentation and undue influence in respect of the plaint A schedule properties that the Will is vitiated by fraud and misrepresentation and does not bind her and that her right is not in any way affected, Further, Siddappa also obtained an agreement of sale from Kondappa. The Will and the agreement are not binding on the plaintiff and they do not deprive their right in the plaint schedule properties. After the death of Kondappa there was a mediation of elders in which Siddappa admitted that he obtained the Will and the sale deed by fraud and misrepresentation when Kondappa was not in a sound and disposing state of mind. Defendants 1 and 2 (defendants 5 and 6 in the main suit) are not cooperating for the partition of 1/6th share of the plaintiff and therefore, she prayed for partition of plaint A schedule property and for allotment of 1/6th share. 12. It may be noticed that the plaint A schedule property is the same as that of items 3 to 9 in plaint schedule properties in O.S.No.1 of 1977. In O.S.No.32 of 1980, Parvatamma, Chandrasekhar, Sitaramaiah, Kodandaramaiah (who are defendant No.5, plaintiff No.2 and defendants 2 and 3 in O.S.No.1 of 1977) are the defendants besides Siddappa as sixth defendant, who is the next friend and guardian of plaintiff No.2. 13. Parvatamma as D. 1, Chandrasekhar as D.2 and Sitaramaiah as D.3 filed written statements. The contents of the written statements filed by Chandrasekhar and Sitaramaiah are same as in O.S.No.1 of 1977. It is, however, interesting to note that Parvatamma who is the defendant No.1 in O.S.No.32 of 1980 in her written statement categorically stated that plaint A schedule properties are ancestral and joint family properties of Kondappa and that after his death she is entitled to 1/6th share along with the plaintiffs. In her written statement in O.S.No.1 of 1977 as already noticed, she stated that the plaint schedule properties are self acquired properties of late Kondappa. Be that as it may, it is not necessary to again summarise the written statements filed by the defendants in O.S No.32 of 1980. On the basis of the pleadings, the trial Court framed the following issues for consideration.
1. Whether the plaintiff is entitled to any share in the suit properties? 2. Whether the Will dated 13-11-1979 is valid and vitiated by fraud? 3. Whether this defendant is liable for costs? 4. Whether the suit as framed is maintainable? 5. To what relief ? Pleadings in Tr.A.S.No.3520 of 1985:
14. This Transferred Appeal arises against O.S.No.30 of 1978 on the file of the Court of the Subordinate Judge, Madanapalle. The suit was filed by Kondappa for cancellation of lease deed and sale deed executed by him. The lease deed was executed in favour of Sitaram his son-in-law, the first defendant and the sale deed was executed in favour of Sitaram (D.3) and Krishna Murthy, the latter being the brother of Sitaram. In the plaint it is alleged as follows. The plaintiff (D.1) had a son aged 19 years, who died in or about 1974. He was in distress on account of his death. His wife became seriously ill due to cancer and he was suffering from infirmities of old age. When he was in that condition, his agricultural operations slackened. Therefore the first defendant who was till then living in Kolar gold fields and eking out livelihood in a tea stall, proposed to the plaintiff that he would help him in the cultivation and
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management of the immovable properties. The first defendant also suggested that a document authorising him to manage the properties be executed undertaking to render periodical account of the income from the estate of Kondappa by taking a reasonable share in the income. As the plaintiff had to go to Tirupati monthly for the treatment of his wife he requested the first defendant to get a suitable document prepared. The first defendant went to Punganur to go to the plaintiff, got the document prepared the plaintiff signed on it and got registered under the impression that the document was prepared on the terms as agreed upon. He executed the document in a hurry as he was in a restless condition and that he did not know that the documents signed by him on 29-3-1976 are lease deed and sale deed. He never agreed to lease out the property for Rs.5,000/- per year for ten years. He never agreed to sell the house site to the defendants. He would not have signed the documents and agree for registering them if he had known that they were lease deed and sate deed. The yearly lease amount is grossly inadequate when compared to the actual annual income of Rs.8,000/- to Rs.10,000/-. There is a well with adequate water filled with oil engine for irrigation of paddy and sugarcane crops. The landed property is worth about Rs.30,000/- and house site is worth about Rs.10,000/-. Thus, the sale deed and lease deed are vitiated by fraud misrepresentation and undue influence. The first defendant was not put in possession of the suit property as alleged and the lease deed was not acted upon. When the first defendant misappropriated the profits and did not render accounts, the plaintiff protested when he was informed by the first defendant about the lease for ten years and about the documents executed on 27-3-1976 and 29-3-1976. The plaintiff was not paid Rs.5,000/- or any other amount either before or after execution of the lease deed. When the plaintiff protested, the first defendant filed O.S.No.757 of 1976 on the file of the Court of the District Munsif, Punganur and obtained interim injunction against the plaintiff. The lease deed has become an impediment to the defence in O.S.No.757 of 1976 and hence the plaintiff filed suit for cancellation of tease deed and sale deed which were executed by fraud misrepresentation, and undue influence, Items 3 to 9 are the subject matter of the lease deed and item 2 is the subject matter of the sale deed. 15. The suit was opposed by the first defendant stoutly denying any fraud, misrepresentation, coercion or undue influence as alleged by the plaintiff. In a nutshell it is the case of the defendants in O.S.No.30 of 1978 that the plaintiff, Kondappa himself approached and requested Sitaram to advance some amount to meet the expenses of medical treatment of his ailing wife that he would lease out the plaint A schedule properties and also sell the plaint B schedule house that defendants 1 and 2 agreed for the same and that as there was a pressing legal necessity for Kondappa he voluntarily, in a state of sound mind and in a state of good physical health sold plaint B schedule properties for an amount of Rs.1,500/- and registered the sate deed on 27-3-1976 after duly receiving the consideration. The defendants were put in possession of the property. The plaintiff also leased out the agricultural lands in plaint A schedule for an amount of Rs.5,000/- for ten years to be enjoyed by Sitaram and to re-deliver possession after the period to the plaintiff. Accordingly, registered lease deed dated 29.3.1976 was executed in favour of Sitaram after receiving the consideration of Rs.5,000/- for ten years at the rate of Rs.500/-per year. Since then Sitaram is in possession and enjoyment of the same, that he is raising crops that late Kondappa tried to disturb the first defendant with his peaceful possession and, therefore, the first defendant filed O.S.No.757 of 1976 on the file of the District Munsif Punganur and obtained interim injunction in I.A.No.819 of 1976 on 29-12-1976, which was confirmed on 10.3.1977. It is not correct that the first defendant, Sitaram made Kondappa to believe that the latter is required to execute a document enabling Sitaram to manage the property who at that time was required to go to Tirupati for his wife's treatment. It is not correct to say that both the lease deed and sale deed are prepared and registered on the same day. The sale deed was registered on 29-3-1976 and the lease deed was registered on 27-3-1976 and the plaintiff agreed to the terms mentioned in the lease deed, who voluntarily read both the documents and they were also read out to him. The consideration for both the documents is adequate. It is wrong to state that the annual income of the suit property is Rs.8,000/-to Rs.10,000/- and that the same is exaggerated. The landed property itself is not worth more than Rs.50,000/- The house site does not cost Rs. 10,000/- The lease deed and the sale deed are not vitiated by fraud, misrepresentation and undue influence. The plaintiff is estopped from questioning the documents. On the above pleadings the learned Judge framed the following issues and additional issue.
1. Whether the sale deed dated 27-3-1976 and lease deed dated 29-3-1976 are vitiated by fraud and misrepresentation'? 2. To what relief ?
Additional issue:
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1. Whether the Will executed by the first plaintiff is true and valid?
Pleadings in Tr.A.S.No.3521 of 1985: 16. This appeal arises against the decree in O.S.No.103 of 1978 on the file of the Court of Principal District Munsif. Punganur. Originally, the suit was filed as O.S.No.103 of 1978 on the file of the Court of the Subordinate Judge, Madanapalle. Initially the suit being O.S.No.757 of 1976 was filed on the file of the Court of Principal District Munsif, Punganur and later transferred to the Court of the Subordinate Judge. Madanapalle to be tried along with the connected suits. 17. Sitaram, the son-in-law of Kondappa filed the suit seeking permanent injunction restraining his father-in-law from entering upon his suit lands - items 3 to 10 of plaint A schedule in O.S.No.1 of 1977 and interfering with his alleged possession and enjoyment thereof. In the plaint he alleged that the defendant executed 'Gutha Muchilika' (lease deed) covering the plaint schedule properties on 29-3-1976 for ten years after receiving an amount of Rs.5.000/-that as per the lease deed the defendant delivered possession of the property to the plaintiff who is in continuous possession and enjoyment of the suit schedule property by raising crops, that the defendant's wife his divided brother and his son and other family members are obstructing him in ploughing the land and transplanting paddy seedlings with an intention to occupy the plaint land by force and violence wrongfully and hence permanent injunction may be granted restraining the first defendant his family members and men from interfering with his peaceful possession and enjoyment of the same. 18. Kondappa filed written statement and resisted the suit. The averments in his written statement are the same as the averments in the plaint in O.S.No.30 of 1978 filed by him for cancellation of lease deed and sale deed. He reiterated that he never intended to execute any lease deed in favour of the plaintiff and never received any lease amount from him and that the plaintiff was not entitled to remain in possession and enjoyment of the suit property. As noticed earlier, after the death of Kondappa, Chandrasekhar. Parvatamma and Reddemma (plaintiff No.2 and defendants 5 and 6) were added as legal representatives. The fifth defendant. Parvatamma filed a separate written statement alleging that the lease deed executed by Kondappa in favour of Sitaram is not valid and he is not entitled to remain in possession and for permanent injunction as prayed in the suit. The fourth defendant who is the wife of Sitaram, plaintiff in O.S.No.103 of 1978 (O.S.No.757 of 1976) filed a separate written statement alleging that she is entitled to 11/6th share in the suit property and that she is not in any way causing obstruction to the plaintiff's enjoyment of the suit property. The second defendant, Chandrasekhar filed a memo adopting the written statement filed by Parvatamma. 19. On the basis of the above said pleadings the following issues and additional issues were framed.
1. Whether the plaintiff is entitled to the permanent injunction prayed for? 2. Whether the suit lease deed is vitiated by fraud and undue influence as pleaded by the defendant'? 3. To what relief?
Additional Issues:
1. Whether the document dated 29-3-1976 is true valid and binding? 2. Whether the plaintiff is entitled for injunction? 3. To what relief?
20. The trial Court tried the suits jointly. Entire evidence was recorded in O.S.No.1 of 1977 treating the same as evidence in other three suits. Except the second defendant (Krishna Murthy) in O.S.No.30 of 1978. the parties in O.S.No.30 of 1978. O.S.No.103 of 1978 and O.S.No.32 of 1980 are also parties in O.S.No.1 of 1977. Therefore, as already indicated, all the parties will be referred to by their status in O.S.No.1 of 1977. 21. The guardian of the minor second plaintiff, Payala Siddappa the is also described as Siddaiah) was examined as P.W.1 and one K.Chandramachari was examined as P.W.2. Besides this oral evidence, the plaintiff marked Exs.A.1
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to A.4 which are photographs and negatives showing the suit property and irrigation well. Fourteen (14) witnesses were examined as defendants' witnesses D.W.1 is the third defendant. D.W.4 and D.W.5 are defendants 5 and 6 and D.W.7 is the second defendant. D.Ws.2, 3, 6 and 8 to 14 were examined in an attempt to prove important documents marked in the suit. Exs.B1 to B 24 were marked for the defendants. The registered Will dated 13-111979 (Ex.B.1) and registered lease deed dated 20-3-1976 (Ex.B.2) executed by Kondappa in favour of Sitaram. the registered sale deed (Ex.B.4) dated 27-3-1976 by Kondappa in favour of Sitaram and his brother Krishna Murthy are the important documents relevant for deciding the controversy. Besides this, the registered partnership deed dated 17-6-1974 between late Kondappa and Siddappa (P.W.1) is also one of the important documents. 22. The issues framed in the four different suits mainly deal with the questions1) Whether the suit properties are joint family properties of Kondappa or separate properties? (issues No. 1 and 3 in O. S. No. 1 of 1977) 2) Whether the Will set up by defendants 3 and 4 (sons of P.W.1) is true and valid and is not vitiated by fraud, misrepresentation and undue influence? (issue No.6 in O.S.No. 1 of 1977) 3) Whether the lease deed and sale deed (Ex.B.4) are liable for cancellation on the ground of fraud and misrepresentation? (issue No.1 in O.S.No.30 of 1978 and Issue No.2 and additional issue No.1 in O.S.No.1 of 1977) 4) How and why the property of late Kondappa is to be partitioned among the heirs who are entitled to it? (Issues No.4 and 7 in O.S.No.1 of 1977 and issue No.1 in O.S.No.32 of 1980)
23. The other incidental questions which were also adverted to by the trial Court are not very much pressed before me and therefore they are not specifically pointed out though they will be dealt with at appropriate place in the judgment. 24. The trial Court on consideration of oral and documentary evidence, on the first question held that the properties are joint family properties and not self-acquired properties of Kondappa. On the second question it was held that Ex.B.1 will was validly executed by Kondappa during his lifetime and that the same is true valid and binding on all the parties to the suit including defendants 5 and 6. As to whether Exs.B.2 and B.4 - lease deed and sale deed executed by Kondappa are vitiated by fraud misrepresentation and undue influence, the trial Court, while holding that Exs.B.2 and B.4 are not supported by consideration and were obtained by practicing undue influence, fraud and misrepresentation upon Kondappa and they are not binding upon his legal heirs. On the last question, the trial Court taking into consideration the fact that the first son of Kondappa and Mallamma by name Reddeppa predeceased his mother, upon which his 1/3rd share in the joint family devolved on Mallamma, the trial Court held that the second plaintiff is entitled to 11/18th share, defendants 3 and 4 (sons of P.W.1) are entitled to 2/l8th share each under Ex.B.1 will and that the sixth defendant, Reddemma is entitled to 3/18th share inherited to her mother Mallamma. 25. Feeling aggrieved by the judgment and decree, the second defendant filed A.S.No.3025 of 1982 before this Court. The unsuccessful parties in O.S.No.30 of 1978. O.S.No.103 of 1978 and O.S.No.32 of 1980 filed appeals before the District Court, Chittoor which were later transferred to this Court to be adjudicated along with A.S.No.3025 of 1982, which is the main appeal. Though technically some of the contentions and grounds urged by the appellant in A.S.No.3025 of 1982 are not permissible as being alleged tenant of items 3 to 10 of plaint A schedule property, he cannot be said to have any grievance either regarding Ex. B. 1 Will or the shares apportioned by the trial Court. However, as he is aggrieved by the judgment and decree in O.S.No.30 of 1978 as well as O.S.No.103 of 1978 and all the matters are being heard together I have finally heard the matters. Further, the same counsel who is appearing for the defendants is also appearing for the plaintiff in O.S.No.32 of 1980 and from this point of view also I heard the learned counsel for the appellant in detail. Submissions of the learned counsel in brief 26. Learned counsel for the appellant, Sri K.V.Reddy submits that the suit schedule property is self, acquired property of Kondappa and therefore on his death the second plaintiff and defendants 5 and 6 being class 1 heirs alone are entitled for partition in equal shares. Secondly, he submits that Ex.B1 Will executed by Kondappa is dated
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13-11-1979 and the same is not valid and the execution of the same is surrounded by various suspicious circumstances. The Will is forged and brought into existence by P.W.1, the father of defendants 3 and 4. In any event, the Will is not properly proved in accordance with Sections 59 and 63 of Indian Succession Act. 1925 and Section 68 of Indian Evidence Act, 1872, if the Will is disbelieved, defendants 3 and KMs. 4 will not be entitled to 2/18th share each and the entire property, assuming it as a separate property of Kondappa, will have to be partitioned among second plaintiff and defendants 5 and 6. The learned counsel further submits that Exs.B.2 and B.4 are voluntarily executed by Kondappa and they are not vitiated by fraud or undue influence. The trial Court erred in drawing an inference based on the alleged unconscionable consideration for the lease deed that Ex.B.2 lease deed is vitiated by fraud. Indeed, there is no finding that the amount of Rs.1500/- the sale consideration for Ex.B.2 sale deed is unconscionable. In any event, the learned counsel submits that fraud and misrepresentation should be specifically pleaded and proved beyond doubt and no action or no document can be nullified on mere assumption of fraud and misrepresentation. 27. Sri K.F.Baba, learned counsel appearing for the second plaintiff (who is since declared as major) submits that the suit schedule property is joint family property of Kondaiah and his sons. Except the fifth defendant, Parvatamma, the daughter of Kondappa through his first wife, none of the defendants disputed the joint family nature of the property in the written statements. The evidence of the second defendant as D.W.7 also shows that the property is joint family property. Exs.B.2 and B.4 which are the two documents sought to be cancelled by Kondappa in O.S.No.30 of 1978 do not suggest that the property allegedly demised under Exs.B.2 and B.4 is separate property of Kondappa. Exs.B.2 and B.4 contain unconscionable terms and therefore it has to be held, that they are vitiated by fraud and misrepresentation. The learned counsel contends that Ex.B1 will is not true and valid and is not binding on the second plaintiff if Ex.B.1 Will is disbelieved, according to the learned counsel, the second plaintiff would be entitled to 15/18th share and Reddemma being the daughter of Mallamma alone would be entitled to 3/18th share and defendants 3 and 4 will not be entitled to any share in the property of joint family of Kondappa and his family. 28. The learned counsel for respondents 3 and 4, Sri Vijayachandra Reddy submits that Ex.B.2 lease deed is not supported by consideration and therefore under Section 25 of the Indian Contract Act the same is void. The lease deed executed by Kondappa in favour of the second defendant is not for the benefit of the estate and not binding on the second plaintiff. The second defendant is not a benefitted transferee under Exs.B.2 and B4 and therefore he cannot seek any injunction in the suit. Adverting to Ex.B.1 Will, the learned counsel submits that under Section 30 of the Indian Succession Act, a Hindu is entitled to dispose of his undivided share by Will and therefore the will executed by Kondappa bequeathing his l/3rd share in the joint family property in equal shares to defendants 3 and 4 is legally valid and binding on all the parties. There are no suspicious circumstances surrounding the execution of the will by Kondappa and that P.W.2 and D.W.2 are attestors of Ex.B.1 Will and there is nothing to disbelieve the evidence of these witnesses. Therefore, he would urge to dismiss the appeals. Points for consideration : 29. Having regard to the pleadings in the suits, the findings recorded by the lower Court and the rival contentions before this Court, the points that arise for consideration in these appeals are1) Whether the suit properties are joint family properties of Kondappa or separate properties? 2) Whether the Will (Ex.Bl) set up by defendants 3 and 4 (sons of P.W.1) is true and valid'? 3) Whether the lease deed (Ex.B.2) and sale deed (Ex.B4) are liable for cancellation on the ground of fraud and misrepresentation'? 4) To what relief.?
In re Point No.1: 30. The appellant in Tr.A.S.No.3519 of 1985 (plaintiff in O.S.No.32 of 1980) is the sixth defendant in O.S.No.1 of 1977. In other three appeals, the second defendant who is her husband is the appellant. The second defendant did not specifically plead that the properties are self-acquired properties of Payala Kondappa, In his written statements in O.S.No.1 of 1977 and in O.S No.30 of 1978 and in his plaint in O.S.No.103 of 1978 the second defendant did not
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specifically plead that the suit schedule property in O.S.No 1 of 1977 is not joint family property. The first defendant, Payata Kondappa, defendant No.6 and defendants 3 and 4 admit in their written statements that the property is joint family property. It is interesting to note that defendant No.5 who is the daughter of Payala Kondappa through his first wife alone disputed the claim of the plaintiffs that it is joint family property. It is also interesting to note that she (defendant No.5 in O.S.No. 1 of 1977) filed written statements in O.S.No.32 of 1980 (partition suit by defendant No.6) and in O.S.No.103 of 1978 - suit for injunction by defendant No.2). But in these written statements the pleading by defendant No.5 that it is not joint family property is absent. In the appeals, the learned counsel who appears for the daughter as well as son-in-law of Payata Kondappa (defendants 2 and 6) however submits that when the suits were tried jointly and a common judgment is rendered the absence of plea in the pleadings of defendant No.2 have to be ignored, as the plaintiffs did not discharge the burden which is on them that the property is joint family property. The lower Court erred in determining the issue Nos.1 and 3 in O.S.No.1 of 1977 in favour of the plaintiffs. The learned counsel also relied on the Will - Ex.B.1 and contends that the same does not specifically describe the property as joint family property. Before examining further, it is necessary to briefly notice the relevant pleadings. 31. In the written statement in O.S.No.1 of 1977, the second defendant states that "plaintiffs and the first defendant are members of a Hindu joint family.......and that he has no concern with the division of the property which is between the first plaintiff and the first defendant". His wife, the sixth defendant mainly attacks Ex. B. 1 Will and does not specifically aver that it is self-acquired property of Kondappa. It is only the fifth defendant, the daughter of Kondappa through his first wife who alleged that 'plaint schedule properties are self-acquired properties of the first defendant and they are not ancestral properties. In O.S.No.32 of 1980 filed by the fifth defendant after the death of her father claiming 1/6th share in the property, in paragraph 4 of the plaint in O.S.No.32 of 1980, she avers that plaint schedule properties are ancestral and joint family properties of Payala Kondappa and that after his death she became entitled to 1/6th share. It is interesting that Paravathamma who is fifth defendant in O.S.No. 1 of 1977 and first defendant in O.S.No.32 of 1988 in her written statement in the latter suit in paragraph 3 categorically admits that plaint A schedule properties are ancestral and joint family properties of Payala Kondappa. These are the necessary pleadings. Absolutely there is no evidence either oral or documentary to support the plea of the appellant in A.S.No.3025 of 1982 that it is self-acquired property of Kondappa. P W 1 and PW2 admit that it is joint family property of Kondappa. P.W 1 who is the younger brother of Kondappa deposes that he and his brother defendant No.1 got divided and the suit schedule properties fell to the share of Kondappa who along with his wife Reddemma constituted joint family. There are no new acquisitions by Kondappa. D.W.5 who is fifth defendant in O.S.No.1 of 1977 and plaintiff in O.S.No.32 of 1980 is silent in her evidence as to the nature of the property. Indeed, D.W 6 who is defendant No.6 and who took a specific plea in the written statement that it is self-acquired property of Kondappa does not even whisper in the evidence that it is self-acquired property. Her entire deposition deals with execution of Ex.B.1 Will by Kondappa. Reading the pleadings and evidence on record it is not possible to accept the contention of the learned counsel for the appellants that the suit schedule property is self-acquired property of Kondappa, The learned counsel relied on the judgments of this Court in Subbayya v. Sitaramamma 1958 (2) An.WR 59 and S. Udayabhaskara Rao v. V. V.Kanaka Durga Rao 1955 (2) ALT 534 and the judgment of the Supreme Court in Mudigowda v. Ramachandra, MANU/SC/0289/1969 : [1969]3SCR245 and submits that when P.W.1 and Kondappa partitioned the properties there is a severance of joint status and therefore, when the plea of plaintiffs is denied, the burden lies on the plaintiffs to prove that the property is joint family property. 32. Sri K.F.Baba, learned counsel for the second plaintiff submits that the appellants admitted that the property is joint family property of Kondappa and hence there was no necessity for the plaintiffs to prove specifically that it is joint family property. He also submits that the plaintiffs and the first defendant alone constituted point family and when they themselves go to the Court for partition admitting the joint nature of the property, the second defendant who is son-in-law and alleged lessee of the property cannot question the nature of the property. He also submits that though Parvatamma raised a plea she herself admitted in the written statement filed in O.S.No.32 of 1980 that it is ancestral and joint family property and that though the appellant in Tr.A.S.No.3519 of 1995 (filed by Reddemma) was in the witness box. She never deposed against the plea of the plaintiffs. Therefore, he submits that the question does not arise at all in the appeal. 33. According to Mitakshara Law property inherited by a male Hindu from his father, grand-father or great grandfather is ancestral property, sons grandsons and great-grandsons acquire an interest in the ancestral property by birth.
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As between the son and the father, they have equal interest in the ancestral property and the son's interest is independent of his father's interest. Such property is divisible as it is always equated with coparcenary property, See principles of Hindu Law, by Mullas (15th Edn.) Pp.221, 223, 224 and 303. 34. In Bhagwati Prasad v. Rameshwari Kuer, MANU/SC/0060/1951 : [1951]2SCR603 , their Lordships of the Supreme Court laid down the principles as under.
The general principle undoubtedly is that a Hindu family is presumed to be joint unless the contrary is proved. There is no presumption on the plaintiff's side too that because one member of the family separated himself there has been separation with regard to all. It would be a question of fact to be determined in each case upon the evidence relating to the intention of the parties whether there was a separation amongst the other co-parceners or that they remained united The burden would undoubtedly lie on the party who asserts the existence of a particular state of things on the basis of which he claims relief.
35. In Raghavamma v. Chenchamma, MANU/SC/0250/1963 : [1964]2SCR933 . His Lordship Subba Rao, 1, (as His Lordship then was) relied on the above statement of law and reiterated the principle as under.
Whether there is a partition in a Hindu joint family is therefore a question of fact, notwithstanding the fact that one or more of the members of the joint family were separated from the rest, the plaintiff who seeks to get a specified extent of land on the ground that it fell to the share of the testator has to prove that the said extent of land fell to his share, but when evidence has been adduced on both sides the burden of proof ceases to have any practical importance.
36. In Mudigowda's case (supra) the Supreme Court dealing with the question on burden of proof as to the nature of joint family property relied on the judgment of the Privy Council in Appalaswami v. Suryanarayanamurti AIR 1947 PC 189, and observed as under.
The law on this aspect of the case is well settled. Of course there is no presumption that a Hindu family merely because it is joint possesses any joint property. The burden of proving that any particular property is joint family property is, therefore, in the first instance upon the person who claims it as coparcenery property. But if the possession of a nucleus of the joint family property is either admitted or proved, any acquisition made by a member of the jointly family is presumed to be joint family property. This is however subject to the limitation that the joint family property must be such as with its aid the property in question could have been acquired it is only after the possession of an adequate nucleus is shown that the onus shifts on to the person who claims the property as self-acquisition to affirmatively make out that the property was acquired without any aid from the family estate
37. The other two judgments relied on by the learned counsel for the appellants in Subbayya' case and Udayabhaskara Rao's case (supra) are also to the similar effect and it is not necessary to refer to the same in view of the settled legal position. Applying the above principles, is it possible to agree with the learned counsel for the appellants'? 38. Admittedly after partition between P.W.1 and Kondappa, the latter did not acquire any property and he continued to manage the ancestral property in which plaintiff No.2 acquired a right by birth. The first defendant late Kondappa agreed that they are joint family properties and indeed his two daughters also agreed either positively or by not denying and proving otherwise that it is Joint family property. Therefore, the appellants cannot be permitted to take a plea at this stage that the plaintiffs failed to discharge their burden on them. The plaintiffs have discharged their burden by pleadings and evidence that the property of late Kondappa is joint family property. Therefore, on Point No. 1, I hold that the suit schedule properties in O.S.No.1 of 1977 are joint family properties of Kondappa. In re Point No. 2: 39. Payala Siddappa (P.W.1) is the younger brother of Payala Kondappa. After the death of Payala Mallamma (first plaintiff), as per the orders of the trial Court dated 19-11-1979 in I.A.No.778 of 1979 P.W.1 was appointed as guardian for the minor second plaintiff Defendants 3 and 4 are the sons of P.W.1. In the written statements filed by defendant No.3, the case set up is that Payala Kondappa executed registered Will - Ex.B1 in a sound disposing state
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of mind voluntarily out of affection in view of the services rendered by him during Kondappa's old age towards defraying the expenses of the treatment, that under the Will, Kondappa bequeathed his property in three equal shares to the second plaintiff, third and fourth defendants and that after the death of Kondappa all the three became entitled to his property left behind him. Therefore, defendants 3 and 4 claimed 2/3rd share in the property of Kondappa. The written statement of Kondappa filed in O.S.No.1 of 1977 before his death is silent on the execution of the Will. This could be because the Will came into existence after filing the written statement or the beneficiaries wanted execution of the Will to be known after his death. Be that as it may, the second defendant who is the husband of sixth defendant also did not make any allegation with regard to the Will. It is only the sixth defendant, the wife of the second defendant (serious contender against the Will - Ex. B. 1) who states in her written statement as well as in her plaint in O.S.No.32 of 1980 that P W.1 by fraud and misrepresentation and exerting undue influence obtained a fraudulent document and that Kondappa was not in a state of understanding things properly when PW.1 obtained Ex.B.1 Will. It is also to be noted that Payala Kondappa died on 24-11-1979 and thereafter defendants 3 to 6 were added as defendants as per the orders in I. A.No.302 of 1980 dated 26-7-1980. 40. It is also necessary to notice the pleadings of the sixth defendant in her separate suit in O.S.No.32 of 1980. The averment/allegation in para 5 of the plaint in O.S.No.32 of 1980 filed by Reddemma is as follows :
While the plaintiff's father Payala Kondappa was sick and bedridden and under medical treatment and was not in a sound and disposing state of mind, the third defendant and the fifth defendant took him to Kalikiri on the pretext that he would be given medical treatment there and at the Sub-Registrar s office at Kalikiri defendants 3 and 5 by undue influence and by fraudulent means and by misrepresentation obtained a will on 13-11-1979 in respect of the plaint A schedule properties in favour of defendants 2, 3 and 4 with a view to gain wrongfully against the interest of the plaintiff and defendants 1 and 2. The alleged Will dated 13-11-1979 obtained by defendants 3 and 5 is vitiated by fraud and misrepresentation and undue influence and will not bind the plaintiff and her right is not in any way affected. While obtaining the Will from the deceased Payala Kondappa the propounder was in a dominating position and the testator was not in a position to understand the nature and effect of disposition and so the Will is invalid and unenforceable and void. The testator's mental power was impaired due to old age, he possessed no memory and intelligence to form a proper judgment as regards disposition(defendants 2, 3, 4 and 5 referred to in the above para are PW1 the second plaintiff and defendants 3 and 4 in 0 S No.1 of 1977.)
41. Defendants 3 and 4 examined P.W.2 and D W.2. the two attestors and D.W.3 who scribed Ex.B.1 Will. The learned counsel Sri K.V.Reddy however attacked the Will. He submits that P W.2 did not speak about the attestation in the chief examination and when he was recalled in his cross-examination by the defendant No.3 he spoke about the attestation. D.W.2, the alleged other attestor is the brother-in-law of the third defendant and, therefore, there is no valid proof of EX B 1 Will. Referring to the evidence of D.W.3, the scribe of Ex.B.1 the learned counsel submits that the evidence of the witness does not inspire confidence as he himself states that Kondappa first signed Ex.B.1 Will and later when there was a shaking in the hands he put his thumb impression on the advice of the Sub-Registrar. Relying on these circumstances, the learned counsel submits that Ex.B.1 Will is not properly proved as required under Sections 67 and 68 of the Indian Evidence Act as well as Sections 59 and 63 of the Indian Succession Act. 42. The learned counsel for the appellants alternatively also submits that the Will is forged, for the very appearance of Ex.B1 shows that it is a forged document, that the alleged signature of Kondappa was scored off, that there are inconsistencies in the evidence of P W.2. D.W.2 and D.W.3 as to who scored off the signature of Kondappa and that there is no signature of Kondappa on page No.2 of Ex.B.1 Will. As to the affixation of thumb impression also, the evidence is inconsistent as to whether Kondappa affixed his thumb impression in the presence of the SubRegistrar as per his advice or in the adjoining room as spoken to by D.W.2. It is also submitted that Kondappa was blind when he allegedly executed the Will and he died eleven days after the execution. The learned counsel, therefore, submits that the Will was brought into existence under suspicious circumstances and hence the same cannot be considered as the last testament of Kondappa. The learned counsel pointed out that the Will is unnatural Will, in that Kondappa gave the property to the sons of his brother ignoring his own daughters defendants 5 and 6 that defendant No.3 took active interest in the execution of the Will, that the document itself is suspicious as the thumb impression of
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Kondappa on Ex.B.1 Will is improper that there was no necessity for Kondappa to execute the Will that though the other family documents were registered at Punganur Sub-Registrar's office peculiarly, Kondappa was taken to Kalikiri and Ex.B.1 Will was executed and registered there. In the absence of any acceptable evidence to prove the Will the shaky signature of Kondappa on the Will disproves the same. These are some of the suspicious circumstances pointed out by the learned counsel for the appellants The learned counsel placed reliance on the judgments of the Supreme Court and the judgments of this Court. He relied on H.Venkatachala v. B.N.Thimmajamma, MANU/SC/0115/1958 : AIR1959SC443 , Purnima Devi v. Khagendra Narayan, MANU/SC/0020/1961 : [1962]3SCR195 , Shashi Kumar v. Subodh Kumar, MANU/SC/0278/1963 : AIR1964SC529 , Ramchandra v. Champabai, MANU/SC/0304/1964 : [1964]6SCR814 , Indu Bala v. Manindra Chandra, MANU/SC/0386/1981 : [1982]1SCR1188 , Kalyan Singh v. Chhoti, MANU/SC/0258/1989 : AIR1990SC396 , Raj Kumar Deen v. A.S.Din MANU/AP/0542/1996 : 1996 (4) ALD 651 and V.S.Mane v. R.V.Ganeshkar, MANU/SC/0412/1995 : AIR1995SC2086 . All these judgments deal with the law of proof of Will and also deal with suspicious circumstances under which the Will cannot be relied on. 43. There are a large number of judicial pronouncements on the subject of proof of Will. Section 68 of the Indian Evidence Act requires examination of one attesting witness to prove the document required by law to be attested. Section 63 of the Indian Succession Act requires that every person of sound mind disposing of his property by Will, shall sign or affix his mark on the Will or it shall be signed by some other person in his presence and by his direction and such execution shall be attested by two or more witnesses as prescribed. It is well settled that whether the Will set up by the propounder is proved to be the last Will of the testator has to be decided in the light of Sections 67 and 68 of the Indian Evidence Act and Sections 59 and 63 of Indian Succession Act. The test to be applied in appreciating the evidence is the satisfaction of the prudent mind in such matters. Whether the testator signed the Will? Whether the testator understood the nature and effect of the execution of the Will? and Whether the testator put his signature being aware of the contents of the Will are the basic questions required to be kept in mind. A decision as to these questions and evidence as to affixation on the Will would prima facie prove that the Will has been executed and that it is the last testament of the testator. Though the 'Will" and or other 'document' requires same legal proof, difference is that the Will speaks from the death of a testator introducing an element of solemnity in the decision of a question as to validity and proof of the will. In Venkatachala's case (supra), the Supreme Court stated the special requirements in the matter of proof of Will as under.
The propounder would be called upon to show by satisfactory evidence that the will was signed by the testator, that the testator at the relevant time was in a sound and disposing state of mind, that he understood the nature and effect of the dispositions and put his signature to the document of his own free will. Ordinarily when the evidence adduced in support of the will is disinterested, satisfactory and sufficient to prove the sound and disposing state of the testator's mind and his signature as required by law, Courts would be justified in making a finding in favour of the propounded In other words, the onus on the propounder can be taken to be discharged on proof of the essential facts just indicated.
44. If the execution of the Will is challenged in a Court as surrounded by suspicious circumstances, the propounder should remove all such legitimate doubts in the matter, by producing cogent, satisfactory and sufficient evidence to dispel suspicion. What would be the suspicious circumstances? I may again refer to the following passage from Venkatachala's case (supra)
The alleged signature of the testator may be very shaky and doubtful and evidence in support of the propounder's case that the signature in question is the signature of the testator may not remove the doubt created by the appearance of the signature; the condition of the testator's mind may appear to be very feeble and debilitated; and evidence adduced may not succeed in removing the legitimate doubt as to the mental capacity of the testator; the dispositions made in the will may appear to be unnatural, improbable or unfair in the light of relevant circumstances; or the will may otherwise indicate that the said dispositions may not be the result of the testator's free will and mind. In such cases the Court would naturally expect that all legitimate suspicions should be completely removed before the document is accepted as the last will of the testator. The presence of such suspicious circumstances naturally tends to make the initial onus very heavy; and, unless it is satisfactorily discharged, Courts would be reluctant to treat the document as the last will of the testator.
45. Even when undue influence, fraud or coercion in the execution of the Will is alleged, the propounder has to
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remove all the doubts and satisfy the 'test of satisfaction of judicial conscience'. Whenever fraud is alleged or suspicious circumstances are alleged, the onus on the propounder of the Will is heavy and unless the Court is satisfied, even if the Will is proved to have been executed, the Court shall not treat the document as the last Will of the testator. 46. In Purnima Devi's case (supra), the Supreme Court held that if a Will is registered, that is a circumstance of the genuineness of the Will, but the mere fact that the Will is registered will not by itself is sufficient to dispel all suspicion regarding the Will where suspicious circumstances existed and alleged. 47. In Shashi Kumar's case (supra), a Constitution Bench of the Supreme Court approved the law declared in Venkatachala's case. The view was again followed in Ramchandra's case (supra). The following statement of law in Shashi Kumars case is apposite.
The onus of proving the Will is on the propounder and in the absence of suspicious circumstances surrounding the execution of the will, proof of testamentary capacity and the signature of the testator as required by law is sufficient to discharge the onus. Where however there are suspicious circumstances, the onus is on the propounder to explain them to the satisfaction of the court before the court accepts the will as genuine. Where the caveator alleges undue influence, fraud and coercion, the onus is on him to prove the same. Even where there are no such pleas but the circumstances give rise to doubts, it is for the propounder to satisfy the conscience of the court. The suspicious circumstances may be as to the genuineness of the signature of the testator, the condition of the testator's mind, the dispositions made in the will being unnatural, improbable or unfair in the light of relevant circumstances or there might be other indications in the will to show that the testator's mind was not free. In such a case, the court would naturally expect that all legitimate suspicion should be completely removed before the document is accepted as the last will of the testator. If the propounder himself takes part in the execution of the will which confers a substantial benefit on him, that is also a circumstance to be taken into account, and the propounder is required to remove the doubts by clear and satisfactory evidence.
48. The above principles were reiterated in Indu Bala's case (supra) and Kalyan Singh's case (supra). 49. In the light of the above principles, I shall examine three aspects relevant to the proof of the will.
1) Whether the execution of the Will is proved?
50. P.W.2 and D.W.2 are the attestors of Ex.B.1 Will whose evidence cannot be avoided as contended by the learned counsel for the appellants. I do not find any infirmity in P.W.2 speaking about the attestation in the crossexamination by third defendant. P.W.2 was called to the witness box to speak about the nature of the suit property and naturally one cannot expect plaintiff No.2 represented by P.W.1 to examine him with regard to proof of the attestor. As propounder of the Will, it is only third defendant who has to prove the Will and, therefore, in his crossexamination he elicited the relevant evidence from P.W.2. Even ignoring the evidence of P.W.2 as suggested by the learned counsel for the appellants, in my considered opinion, the evidence of D.W.3 who said that he saw Kondappa executing the Will cannot be disbelieved merely because he is the brother-in-law of third defendant. It is common place knowledge that when documents like settlement deed or Will are executed in the family it is only family members who are requested to attest the document and ordinarily strangers or pedestrians on the road are not invited to attest the documents. Therefore, I hold that reading the evidence of P.W.2, D.W.2 and D.W.3, the execution of the Will has been proved in accordance with law.
2) Whether the execution of the Will -Ex.B1 is vitiated by fraud, coercion or undue influence?
51. As held by the Supreme Court in Shashi Kumar Banerjee's case (supra), where the caveator alleges fraud or undue influence, the onus is on the caveator to prove the same. The second defendant has not averred anything about Ex.B.1. Sixth defendant as plaintiff in O.S.No.32 of 1980 alleged that Kondappa was not mentally sound and P.W.1 played fraud, took him to Kalikiri and got executed the Will by playing fraud and undue influence. Therefore, the burden is on sixth defendant (D.W.5) to prove this aspect of the matter. But the sixth defendant has not produced any independent evidence except denying the suggestion that defendants 3 and 4 were maintaining Kondappa and taking good care of him during his illness. In the absence of any independent satisfactory evidence, I cannot agree with the
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submission of the learned counsel for the appellants that Ex.B.1 Will is vitiated by fraud, coercion and undue influence or that thumb impression on Ex. B. 1 is forged.
3) Whether Ex.B1 Will can be treated as last Will of Kondappa ignoring the suspicious circumstances surrounding the execution of the will ?
52. It is well settled that even when a Will is proved as required in law, the Court would be reluctant to treat the document as the last Will of the testator if there are suspicious circumstances. When the propounder takes a dominant role in the execution of the Will by the testator it is strong pointer to suspicious circumstances surrounding the execution of the Will. The learned counsel for the appellants points out that there is no signature of Kondaiah on page 2 of Ex.B.1 Will, that the writing on the Will is of unnatural flow, that under the Will Kondaiah has not given anything to defendants 5 and 6, his daughters, that though defendants 3 and 4 are sons of D.W.1 who was representing the minor second plaintiff, P.W.1 was not informed about the execution of the Will, that when all the documents by the family members of Kondappa were registered at Punganur Sub-Registrar's office, peculiarly, Ex.B.1 Will was registered at Kalikiri which is a far off place, that as per the evidence of D.W.2, Kondappa was signing very well prior to execution of Ex.B.1, but suddenly on the date of execution of Ex.B.1, Kondappa could not sign properly and, therefore, allegedly his thumb impression was obtained on the Will and that defendant No.3, D.W.2, the brother-in-law and D.W.3, a resident of Somula took Kondappa to Kalikiri for execution of the Will. These circumstances, according to the learned counsel are suspicious and therefore Ex.B.1 Will cannot be treated as last Will of the deceased testator. 53. When the caveator raises suspicious circumstances, the propounder has to dispel the doubts in the mind of the Court. Defendants 3 and 4 who are the beneficiaries of the Will did not come to the witness box to explain the suspicious circumstances. The evidence of P.W.2 and D.W.2, the attesting witnesses and the evidence of D.W.3, the scribe is not of much help to explain away the suspicious circumstances. The Will was executed on 13-11-1979 and within eleven days thereafter Kondappa died on 24-11-1979 D.W.1, the father of defendants 3 and 4 expressed ignorance about the execution of Ex.B.1 Will. A perusal of Ex.B.1 Will would also show that the learned counsel for the appellants is correct that there is no signature or thumb impression of Kondappa on page 2. Further, Kondappa was aware that defendant No.5, Parvatamma lost his mother (first wife of Kondappa) at the young age and it is but natural to expect Kondappa to give some property to her. This may be the reason why defendant No.5 in her evidence as D.W.5 states that she was present at Kalikiri on the date of presentation of the Will when Kondappa promised her to give share in the property. This is also not explained by defendants 3 and 4. As on the date of execution of the Will there are already suits being O.S.No.1 of 1971 and O.S.No.30 of 1978 and O.S.No.103 of 1978 among the family members and in spite of this the Will is silent as to the position of defendants 5 and 6 who are daughters of Kondappa. 54. Sri Vijayachandra Reddy, learned counsel for defendants 3 and 4 submits that Ex.B.1 is a registered Will and, therefore, it should be presumed to be validly executed. In Purnima Devi's case (supra), the Supreme Court held that though the fact that a Will is registered, it is crucial to prove its genuineness and that registration is not sufficient to dispel the suspicious circumstances. Therefore, the submission made by the learned counsel for the appellants commend to this Court and it must be held that Ex.1 Will cannot be treated as the last testament of late Payala Kondappa and the same cannot be given effect to in law. Accordingly, on Point No.2, I hold that Ex.B.1 Will set up by defendants 3 and 4 is not true and valid. The Point No.2 is answered accordingly. In re Point No.3: 55. Payala Kondappa filed O.S.No.30 of 1978 for declaration that Ex.B.2 lease deed dated 29-3-1976 in respect of items 3 to 10 of suit schedule property and Ex.B.4 sale deed dated 27-3-1976 executed by Payala Kondappa in favour of second defendant and his brother, Krishna Murthy are vitiated by fraud and misrepresentation. The trial Court came to a conclusion that the consideration of Ex.B.2 and Ex.B.4 is unconscionable and therefore both the documents are vitiated by fraud, misrepresentation and undue influence. It relied on the evidence of P.W.2, D.W.7 and D.W.14 in arriving at the conclusion. 56. In the plaint, Payala Kondappa alleged that on account of the death of his elder son he was in distress, that on account of serious illness of his wife, Mallamma he was in a disturbed state of mind and he had to go to Madras and
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Tirupati frequently for treatment, that the second defendant proposed to him that he would help in his cultivation and therefore required the documents of authorisation to deal with the property and therefore he executed the lease deed and sale deed in question. According to Kondappa, D.W.7 misrepresented and obtained the lease deed for ten years for a consideration of Rs.5,000/- (Rs.5001-per annum) whereas the annual income itself would be anywhere between Rs.8,000/-and Rs.10,000/-. It was also alleged that the lease deed was not acted upon. One interesting aspect of the allegations made in the plaint in O.S.No.30 of 1978 filed by late Kondappa is that there is no specific allegation in relation to Ex.B.4 sale deed executed by Kondappa in favour of D.W.7 and his brother. In his written statement, D.W.7 as defendant No.1 in O.S.No.30 of 1978 denied the allegation stating that Kondappa himself voluntarily approached and requested D.W.7 some advance to meet expenses for medical treatment of Mallamma, that there was no pressing legal necessity for Kondappa to voluntarily execute the lease deed and sale deed. Though plaintiff No.2 came on record as legal representative after the death of Kondappa, there is no evidence in proof of the allegations made in the plaint in O.S.No.30 of 1978. Whether fraud has been properly pleaded in accordance with Order 6, Rule 4 CPC and whether fraud and misrepresentation have been proved by cogent, convincing and satisfactory evidence are the questions that fall for consideration. 57. Fraud includes all acts, omissions and concealments which involve a breach of legal or equitable duty, trust or confidence and are injurious to another or by which an undue or unconscientious advantage is taken of another. All surprise, trick, cunning, dissembling and other unfair way that is used to cheat any one is considered as fraud (See "A Treatise on the Law of Fraud and Mistake" by Kerr). When fraud is properly pleaded and proved in a Civil Court of Justice, the same would vitiate the transaction and the plaintiff would be entitled for declaration. 58. In Bharat Dharma Syndicate v. Harish Chandra MANU/PR/0049/1937, the Privy Council laid down that a litigant who alleges fraud or other important conduct should be compelled to place on record the precise details of the charges and that in the absence of such precise and specific allegations of fraud, the person should not be allowed to proceed with the case. 59. In Bhishundeo v. Seogeni Rai, MANU/SC/0059/1951 : [1951]2SCR548 , a Constitution Bench of the Supreme Court laid down as under.
Now if there is one rule which is better established than any other, it is that in cases of fraud, undue influence and coercion, the parties pleading it must set forth full particulars and the case can only be decided on the particulars as laid. There can be no departure from them in evidence. General allegations are insufficient even to amount to an averment of fraud of which any Court ought to take notice, however, strong the language in which they are couched may be and the same applies to undue influence and coercion.
60. In Narayanan v. Official Assignee, Rangoon MANU/PR/0009/1941, the Privy Council ruled that fraud must be established beyond reasonable doubt and finding as to fraud cannot be based on suspicious conjectures, 61. In V. S. Vishwavidyalaya v. Rajkishore, MANU/SC/0430/1976 : (1977)ILLJ85SC , the Supreme Court referred to Bishundeo's case (supra) and reiterated that general allegations of alleged collusion by which the plaintiff seemed to imply some kind of fraud are not sufficient to an allegation of fraud and misrepresentation. 62. I have already referred to the pleadings in O.S.No.30 of 1978. Except making general allegation as to his condition of mental status and as to the need for someone to look after the lands, there are no specific allegations of fraud or misrepresentation. Except stating that D.W.7 kept the lease deed and sale deed ready and obtained the signatures, nothing is coming forward. It is indeed beyond one's comprehension to infer any ignorance on the part of Kondappa for it is in evidence that Kondappa was personally cultivating the lands on commercial basis and was also having money lending business. Can we give credence to the plaint allegation that Kondappa subscribed his signature on Ex.B.2 and Ex.B.4 without reading the documents? in any event, after the death of Kondappa, plaintiff No.2 was included as legal representative of his father. No witness even spoke about the allegation in O.S.No.30 of 1978. Sri K.F.Baba as well as Sri Vijaya Chandra Reddy, realising this, have raised very ingenuous argument that as per the allegations in the plaint in O.S.No.1 of 1977 as well as the allegations in O.S.No.30 of 1978, the annual income from out of the land covered by items 3 to 10 was anywhere between Rs.8,000/- and Rs. 10,000/- per annum and therefore the consideration for Ex.B.2 lease deed is unconscionable. They would like this Court to draw an inference
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that the unconscionable consideration is itself a species of fraud. They placed reliance on the judgment of Bombay High Court in Vinayakappa v. Dulichand, MANU/MH/0223/1986 : AIR1986Bom193 . 63. In Vinayakappa's case, a learned single Judge of Bombay High Court held that mere pecuniary inadequacy of consideration will not generally make the terms of contract too unfair for enforcement unless the degree of inadequacy of contract rendering itself void and unenforceable and that the ground of fraud is altogether different from a contract which renders unenforceable on account of unconscionable consideration. In the case of fraud, the document is vitiated and void whereas in the case of a contract supported by unconscionable and unethical consideration, the same is not rendered void but voidable and the plaintiff can only claim damages in such an event. In fact, the Bombay High Court refers to the following statement of law enunciated by the U.S. Supreme Court in Scot v. United States (1870) 79 US 577 : 20 Law Ed. 438.
If a contract is unreasonable and unconscionable but not void, a court of law will give to the party who sues for its breach damages, not according to its letter, but only such as he is equitably entitled to....
64. Therefore, even if it is accepted that the lease amount of Rs.500/- per annum is unconscionable, the same does not amount to fraud. In view of this, I feel, it is not necessary to refer to the evidence of P.W.1, P.W.2, D.W.7 and D.W.14 who mainly spoke about the approximate annual yield from the agricultural lands. 65. Accordingly, on Point No.3, I must hold that Exs.B.2 and B.4 are not vitiated by fraud and misrepresentation and the trial Court erred in recording a finding that Exs.B.2 and B.4 are vitiated by fraud and misrepresentation. In re Point No.4: 66. In the result, the judgment of the trial Court decreeing O.S.No.1 of 1977 is affirmed. The decree of the lower Court in O.S.No.30 of 1978 is set aside and reversed. The suit filed by defendant No.6 (Reddemma) being O.S.No.32 of 1980 is also decreed subject to the decree in O.S. No. 1 of 1977 as indicated hereinafter. The judgment and decree in O.S.No.1 03 of 1978 (injunction suit by defendant No.2) is dismissed as infructuous as lease period which was for ten years with effect from 21-3-1976 already expired and possession was already taken from D.W.7. In view of the finding that the property of Payala Kondappa is joint family property and also in view of the finding that the Will - Ex.B.1 cannot be treated as the last Will of Kondappa and unenforceable, Payala Chandrasekhar, plaintiff No.2 in O.S.No.1 of 1977 will be entitled to 15/18th share in plaint schedule properties and Reddemma, defendant No.6 will be entitled to 3/18th share. 67. A.S.No.3025 of 1982 arising out of O.S.No.1 of 1977 and Tr. A.S.No.3521 of 1985 arising out of O.S.No.103 of 1978 are accordingly dismissed. Tr. A.S.No.3520 of 1985 arising out of O.S.No.30 of 1978 is allowed and Tr.A.S.No.3519 of 1985 arising out of O.S.No.32 of 1980 is partly allowed declaring that Reddemma, the plaintiff therein is entitled to 3/18th share in plaint schedule properties in O.S.No.1 of 1977. In the circumstances of the case, there shall be no order as to costs. Manupatra Information Solutions Pvt. Ltd.
MANU/WB/0043/1909 Equivalent Citation: (1909)ILR 36Cal768 IN THE HIGH COURT OF CALCUTTA Decided On: 30.03.1909 Appellants: Jagon Ram Marwari Vs.
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Respondent: Mahadeo Prosad Sahu Hon'ble Judges/Coram: Mookerjee and Carnduff, JJ. Subject: Contract Catch Words Mentioned IN Case Note: Minor - Contract with Minor--Benefit of Minor--What are 'Necessaries'--Wedding Presents--Guardian, Discharge or Death of--Majority Act (IX of 1875) Section 3--Guardians and Wards Act (VIII of 1890) Section 52. JUDGMENT Mookerjee and Carnduff, JJ. 1. The plaintiffs, appellants, are tradesmen in the town of Mozaffarpur and are dealers in cloth, gold, pearls, jewellery and other articles. The defendant is a zemindar resident in the same place and is admittedly a person of position and considerable income. The plaintiffs commenced this action for recovery of approximately Us. 2,300 from the defendant, for goods supplied during a period of more than two years from the 14th January 1902 to 18th October 1904. The defendant, who at the time of the institution of the suit was an infant under the guardianship of a certificated guardian, resisted the claim substantially on two grounds, namely, first, that the transactions mentioned in the plaint were entirely fictitious, and secondly, that as at the dates of the alleged transactions, he was an infant, he was not liable to pay for the goods. The Courts below have found concurrently upon the first question in favour of the plaintiffs, and have held upon the evidence that the purchases were made from them for the benefit of the defendant. Upon the second question, they have held that the articles supplied could not be regarded as necessary expenses, and therefore the plaintiffs were not entitled to their value. The plaintiffs have now appealed to this Court, and on their behalf the decision of the District Judge has been assailed substantially on two grounds, namely, first, that at the time of the transactions the defendant was not an infant, inasmuch as the first certificated guardian had been discharged, and, secondly, that even if he be regarded in the eye of law as an infant, the articles supplied were necessaries for which the plaintiffs were entitled to be paid. 2. In support of the first ground urged on behalf of the appellants, it has been pointed out that the defendant was born on the 8th November 1885, that one Bisun Deo was appointed his guardian under the Guardians and Wards Act of 1890 on the 20th November 1901, that on the 28th April 1903 Bisun Deo, upon his own application and with the assent of the present defendant, was discharged from the guardianship, and that it was not till the 8th September 1905 that Chhatradhari, the present guardian, was appointed by the District Judge under Act VIII of 1890. On these facts, which are not disputed, it has been contended on behalf of the appellants that the defendant attained his majority on the 8th November 1903 and not on the 8th November 1906, and that consequently the appointment of the second guardian on the 8th September 1905 was ultra vires. In support of this position, reliance has been placed upon the cases of Patesri v. Champa Lal (1891) 11 All. W.N. 118, Yeknath v. Warubai I.L.R. (1888) 13 Bom. 285 and Birj Molian v. Rudra Perhash I.L.R. (1880) Cal 944. On behalf of the respondent, it has been argued on the other hand that if a guardian be once appointed or declared, the disability of the minor continues until the attainment of 21 years of age, although the guardian may die, be removed or otherwise cease to act, and in support of this proposition reliance has been placed upon the cases Rudra Prokash v. Bhola Nath I.L.R. (1886) Cal 612 Khwahish v. Surju Prasad (1881) I.L.R. 3 All. 598 and Gordhandas v. Harivalubhdas I.L.R.(1896) 21 Bom. 281. In our opinion the contention of the appellants is clearly opposed to the plain language of Section 3 of the Indian Majority Act of 1875, as amended by Section 52 of the Gaurdians and Wards Act of 1890. Section 3 provides that every minor of whose person or property or both, a guardian other than a guardian for a suit has been or shall be appointed or declared by any Court of Justice before the minor has attained the age of 18 years, and every minor of whose property the superintendence has been or shall be assumed by any Court of Wards before the minor has attained that
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age, shall be deemed to have attained his majority when he shall have completed his age of 21 years and not before. The language of this section fully supports the view taken in the cases of Rudra Prokash v. Bhola Nath I.L.R. (1886) Cal 612, Khwahisli v. Surju Prasad I.L.R. (1881) All. 598 and Gordhan-das v. Harivalubhdas I.L.R. (1896) 21 Bom. 281, which is also supported by the recent decision of this Court in Gopal Chunder v. Gonesh Chunder (1905) 4 C.L.J. 112. We are not prepared to adopt the view indicated in the judgment of Sir John Edge in Patesri v. Champa Lal (1891) 11 All. W.N. 118, in which that learned Judge dissented from the decision of this Court in Rudra Prokash v. Bhola Nath I.L.R.(1886) Cal 612. We observe that reliance was placed by Sir John Edge upon the case of Birj Mohan v. Rudra Perkash I.L.R. (1989) Cal 944 with reference to which it is sufficient to state that the language of Section 3 has been altered since that decision was given, and the words "Every minor under the jurisdiction of any Court of Wards" have been replaced by the words "Every minor of whose property the superintendence has been or shall be assumed by any Court of Wards." The view, therefore, that the disability of the minor only continues so long as the Court of Wards retains the charge of his property, can no longer be maintained. We also observe with reference to the case of Patesri v. Champa Lal (1891) 11 All. W.N. 118 that it was dissented from by the learned Judges of the Bombay High Court in Gordhandas v. Harivalubhdass I.L.R. (1896) 21 Bom. 281. It is further worthy of note that as pointed out in Shivram v. Krishna-bai I.L.R.(1906) 31 Bom. 80 the earlier decision in Yeknath v. Warubai I.L.R. 1888 13 Bom. 285 has been superseded by the decision of their Lordships of the Judicial Committee in Mungniram v. Mohunt Gursahai I.L.R. (1889) Cal 347 : L.R. 16 IndAp 195. As regards the decision in the case of Nagardas Vachraj v. Anandrao Bhai I.L.R. (1907) 31 Bom. 590, it is clearly distinguishable. It was ruled in that case that if an order made under the Guardians and Wards Act for the appointment of a guardian is subsequently set aside, the period of minority is not extended to 21 years under Section 3 of the Indian Majority Act. This decision' is based on the perfectly intelligible principle that if an order of Court which has been erroneously made or irregularly obtained, is subsequently revoked, the position is the same as if the order had never been made, or to use the words of Mr. Justice Wright in In re Newman [1899] 2 Q.B. 587, the invalid order is rescinded ab initio and is treated as though never made, so that the party is restored to his original position. This principle has obviously no application to a case in which the guardian either dies, or is removed, or as in the case before us, voluntarily obtains his discharge. Upon a review then of the authorities, and upon an examination of the language of Section 3 of the Indian Majority Act, as amended by Section 52 of the Guardians and Wards Act of 1890, we feel no doubt that if a guardian has once been validly appointed or declared, the minority does not cease till the attainment of 21 years of age by the ward, and it is immaterial, whether the guardian dies or is removed, or otherwise ceases to act. The first ground taken on behalf of the appellants cannot, therefore, be supported and must be overruled. 3. The second ground urged on behalf of the appellant is substantially to the effect that the case has not been properly tried on the merits, that the Courts below have proceeded on the assumption that the defendant is not liable for any articles which are not proved to be necessary to the support of life, and that the accounts show on the face of them that various articles of ordinary use were supplied, as also other articles required by a minor of the position in life of the defendant on the occasion of his marriage which took place in April or May 1903. We have carefully examined the judgment of the Subordinate Judge as also that of the District Judge, and are of opinion that the contention of the appellants is well founded. The Subordinate Judge stated the question to be, whether the articles supplied could be treated as necessary expenses, and held that as most of the purchases were made at or about the time of the marriage of the defendant, and as there was no reliable evidence to show that the things were required for the marriage, the plaintiffs were not entitled to recover. The District Judge proceeded on a somewhat different ground. He held that as many of the articles were supplied shortly after the marriage they could not be treated as necessaries for the marriage; and further, that as the arrangements for the marriage were in the hands of a person named Gajadhar with whom the plaintiffs had no dealings, they were not entitled to recover the price of the articles supplied. It is obvious that there has not been a proper trial of the question in controversy between the parties in either of the Courts below. As we have already stated, the alleged transactions extend over a period of nearly three years from January 1902 to October 1904, while the marriage of the defendant took place in April or May 1903. Apart, from the question, therefore, whether the articles supplied immediately before or after the marriage could be regarded as necessaries, the question remains for consideration, whether the other articles supplied during a period of fifteen months before the marriage and about eighteen months after that event, fall within the category of necessaries. It has been stated to us approximately that goods worth about Rs. 1,300 were supplied on the occasion of the marriage, and articles worth about Rs. 800 were supplied from time to time before and after the marriage. It is obvious that the matter has not been investigated with the fulness it deserved, and that neither of the Courts below has determined with reference to
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each article alleged to have been supplied, whether it was one in respect of which the plaintiffs were entitled to recover the value. It is manifest that in the interests of justice, the decisions of the Courts below must be discharged and the case re-investigated. To enable the lower Court to do so, we shall lay down the principles upon which the enquiry ought to proceed. 4. Under Section 11 of the Indian Contract Act, every person is competent to contract who is of the age of. majority according to the law to which he is subject. This section as interpreted by their Lordships of the Judicial Committee in Mohori Bibee v. Dharmodas I.L.R. (1903) Cal 539: L.R. 30 IndAp 114 provides that no person is compepetent to contract who is not of the age of majority according to the law to which he is subject in other words that a minor is not competent to contract and that, therefore, a minor's agree-ment is void: Dattaram v. Vinayak I.L.R. (1903) 28 Bom. 181 and Kamta Prased v. Sheo Gopal I.L.R. (1904) All. 342. If, therefore, as previously indicated in Watkins v. Dhunnoo Baboo I.L.R (1881) Cal 140, a minor is a person incapable to contract within the meaning of Section 11, Section 68 of the Indian Contract Act becomes applicable to his case. Now Section 68 provides that if a person incapable of entering into a contract-was quote only so much of the section as is applicable to the case before us is supplied by any person with necessaries, suitable to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person. There is no definition of the term "necessaries" in the Act. We may consequently turn to judicial decisions to determine its precise import. Now it was ruled by Baron Parke in Peters v. Fleming (1840) 6 M. & W. 42: 53 R.R. 495 that "from the earliest time down to the present, the word 'necessaries' is not confined in its strict sense to such articles as were necessary to support life, but extended to articles fit to maintain the particular person in the state, degree and station in life in which he is and therefore we must not take the word 'necessaries' in its unqualified sense but with the qualification as above pointed out." This definition was adopted by the Exchequer Chamber in Ryder v. Woombell (1868) L.R. 3 Exch 90: 4 Exch. 32, in which it was stated that the rule of law is clearly established that an infant is generally incapable of binding himself by a contract, that to this rule, there is an exception introduced not for the benefit of the tradesman who may trust the infant, but for that of the infant himself, that this exception is that he may make a contract for necessaries: see also Walter v. Everard [1891] 2 Q.B. 369. To put the matter concisely, "necessaries" means goods suitable to the condition in life of the defendant and to his actual requirements at the time of the sale and delivery, and whether an article supplied to an infant is necessary or not, depends upon its general character and upon its suitability to the particular infant's means and station in life. It must further be observed that as "necessaries" include everything necessary to maintain the infant in the state, station, or degree of life in which he is, what is necessary is a relative fact, to be determined with reference to the fortune and circumstances of the particular infant; articles therefore that to one person might be mere conveniences or matters of taste, may in the case of another be considered necessaries, where the usages of society render them proper for a person in the rank of life in which the infant moves. The infant's need of things may also sometimes depend upon the peculiar circumstances under which they are purchased and the use to which they are put. For instance, articles purchased by an infant for his wedding may be deemed necessary, while under ordinary circumstances the same articles might not be so considered: see Jenner v. Walker (1868) 19 L T N S 398 in which it was ruled that wedding presents for the bride of the infant may be necessaries. To the same effect are the decision in Juggessur Sircar v. Nilumbur Biswas (1865) 3 W.R. 217 and Makundi v. Sarabsukh I.L.R.(1884) All. 417. A further question may also arise, namely, was the infant in actual need of the things purchased. Though an article may belong to a class of things that are unquestionably necessary, and though the particular article furnished may correspond in quality and price with the infant's means, yet if it should turn out that the infant was already plentifully supplied with the thing purchased, it does not fall within the description of necessaries in that particular case. As observed by Lord Justice Lindley in Johnstone v. Marks (1887) 19 Q.B.D. 509, the true question is not a mere abstract one, whether the articles supplied were in their nature necessaries, but a practical question, whether they were necessary for the defendant, that is necessaries to him, and they could not be, if he already had. plenty of them. An infant may, consequently, show that he was already fully supplied with similar goods, and it is immaterial whether the plaintiff knew it or not: Barnes v. Toye (1884) 13 Q.B. D 410. It is thus incumbent upon one who sells goods to an infant to enquire into his circumstances so as to determine not only whether the thing sold is such an article as an infant of the station in life of the purchaser would require, but whether in the particular case, the purchaser had need of it, for if the infant did not require it the seller cannot recover it. The reason for this rule is plain and was thus explained by Gibson C.J. in Johnson v. Lymes (1843) 6 W & S 80. "The rule of law is that no one may deal with a minor. The exception to it is that a stranger may supply him with necessaries proper for him, in default of supply by any one else; but the stranger's interference with what is properly a guardian's business must rest upon actual
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necessity, of which he must judge in a measure at his peril. When he assumes the business of a guardian for the purpose of present relief, he is bound to execute it as a prudent guardian would and consequently make himself acquainted with his necessities and circumstances. The credit which the infant's necessities give him, ceases when these necessities cease, and as nothing further is requisite when these are relieved, the exception to the rule is at an end." We may further observe that the question as to what are necessaries, is a mixed question of fact and law. It has been ruled in England that it is a question for the Court to decide whether certain classes of expenditure are necessaries and what class or general description of articles are necessaries, and it is for the jury to determine whether the particular articles fall within any of those classes, and whether they were actually necessary and suitable to the condition of the infant and were furnished under such circumstances as to authorise a recovery; the quantity, quality and value of what was furnished is of course a question for the jury: Peters v. Fleming (1840) 6 M. & W. 42: 55 R.R. 495, Maddox v. Miller (1813) 1 M. & S 738: 14 R.R. 565 and Wharton v. Mackenzie (1844) 5 Q.B. 606: 64 R.R. 584. The person who seeks to recover for articles furnished to an infant on the ground that they were necessaries is bound to prove that the articles were in their nature necessaries suitable to the infant to whom they were supplied and were actually needed by the infant. But if there are special circumstances within the knowledge of the infant himself which make those articles not necessaries, he may prove them; for instance, that he was fully supplied with, similar goods; Ford v. Fothergill (1794) 1 Pea 301: 3 R.R. 695. With reference to the observation made by the learned District Judge that as the arrangements for the marriage were in charge of Gajadhar, the articles supplied could not be treated as necessaries, we may point out that the mere fact that an infant has a father, mother or guardian, does not prevent his being bound to pay for what was actually necessary for him when furnished, if neither his parents nor guardian did anything, towards his care or support. The test to be applied is whether the articles supplied were needed for the use of the infant: Call v. Ward (1842) 4 W & S 119. 5. The result, therefore, is that this appeal must be allowed, the judgment and decree of the District Judge set aside, and the case remitted to him for decision upon the question, whether the articles supplied were necessaries on the principles already explained. The accounts produced by the plaintiffs-appellants must be carefully scrutinised and the case of each article or class of articles separately considered. If for the elucidation of any particular point, fresh evidence is found necessary, the District Judge will be at liberty to take evidence himself or to direct the Subordinate Judge to take it and to submit it to him for consideration. Costs of this appeal will abide the result. Manupatra Information Solutions Pvt. Ltd.
MANU/MH/0102/1948
Equivalent Citation: AIR1949Bom215, 1949(51)BOMLR256 IN THE HIGH COURT OF BOMBAY O.C.J. Suit No. 1510 of 1947 Decided On: 21.07.1948 Appellants: Raj Rani Vs. Respondent: Prem Adib Hon'ble Judges/Coram:
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Desai, J. Subject: Contract Catch Words Mentioned IN Case Note: Indian Contract Act (IX of 1872), Section 9MinorContract of serviceContract entered into by minorValidity of contractContract void at law. A contract of service entered into by a father on behalf of his minor daughter is not enforceable at law as it is void for want of consideration. The plaintiff, a minor girl, sued by her next friend, her father, for the recovery of damages alleged to have been suffered by her by reason of a breach of contract of service entered into with the defendant. The defendant contended that as the plaintiff was a minor at the date of the contract, the contract was void in law and not enforceable : Held: That under Section 11 of the Indian Contract Act, 1872, the contract was void, as the plaintiff's promise could not be enforced against her, and as her promise to serve supplied no consideration, for the contract. There being absence of consideration contemplated by the parties there was no contract between the plaintiff's father and the defendant which was enforceable at law, and there was no breach of a contract in respect of which the plaintiff's father or the plaintiff could sue for damages. The entire consideration for the agreement was the plaintiff's promise to serve, but in fact the plaintiff's promise did not constitute any consideration in law and therefore there was in law no contract. A contract of personal service does not stand on the same footing as a contract of apprenticeship or a contract of marriage of a minor. The mere fact that the contract is for the benefit of the minor does not entitle the minor to sue on the contract. Case law on the point fully considered. JUDGMENT Desai, J. 1. This suit raises a question of importance so far as contracts of service entered into on behalf of minors are concerned. Contracts involving service by minors may be of considerable value in cases like the one before me where the minor is allotted the role of a Cinema Star or is employed as an artist for the production of a film of considerable value. 2. The plaintiff in this case is a minor girl who has brought this suit suing by her next friend, her father and natural guardian, one Dhirajsingh Muramal, for the recovery of a sum of Rs. 8,708-10-0 being the amount of damages alleged to have been suffered by her by reason of a breach of a contract entered into by Dhirajsingh Muramal with the defendant for and on her behalf. Paragraph 1 of the plaint states as follows :
On or about January 15, 1947, the defendant orally agreed with the plaintiff s father named Dhiraj Singh Muramal, to employ the plaintiff as an artist in the defendant's concern called the Prem Adib Pictures for a period of one year commencing from the 15th January 1947 at the salary of Rs. 9,500 to be paid in
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twelve equal monthly installments. As the plaintiff was and is a minor the said Dhiraj Singh Muramal entered into the said agreement on behalf of and for the benefit of the plaintiff. It was inter alia agreed between the said Dhiraj Singh Muramal and the defendant that the plaintiff was to attend the defendant's office, shootings and rehearsals as and when required by the defendant. The terms of the said agreement were recorded in a writing, a copy whereof is hereto annexed and marked 'A',
3. Exhibit 'A' to the plaint is a curious document as read in conjunction with the plaint. It reads as follows :
Agreement drawn and signed on January 15, 1947, between Mr. Prem Adib the Proprietor Of Prem Adib Pictures, Andheri, a film producing concern hereinafter called the producer of the one part and Miss Raj Rani residing at Pattatrey Bhuvan, Plot No. 176, Sir Bhal Chandra Road, Hindu Colony, Dadar, Bombay, hereinafter called the artist. This is to confirm and put on record the following terms and conditions arrived at between us as per our personal talk and mutual agreement. That the period of your contract will be from this day of agreement January 15, 1947, to January 14, 1948. That you will be paid a lump sum amount of Rs. 9,500 (rupees nine thousand and five hundred only) for your full period of contract in twelve equal installments. That you will attend the office and the shooting and the rehearsals punctually as and when required. That you will attend Gramophone disk and or Track recording without any obligation to the Company for that you will neither get nor demand any extra amount as royalty or remuneration, stipend or bonus apart from the above-mentioned amount fixed. That all other terms and conditions shall be as are prevailing in agreements and contracts of like nature." At the end of the contract there appears a signature : "For Prem Adib Pictures. (Sd.) Prem Adib, Proprietor. Against that, the following words appear: I confirm and agree. (Sd.) Raj Rani. (Sd.) Dhiraj Singh.
It is stated on behalf of the plaintiff that the oral agreement with the plaintiff's father was in the same terms as exhibit A and that as that agreement was not reduced to writing, the plaintiff's father is not precluded from giving evidence of the terms of that agreement merely because he has put his signature on exhibit A by way of attestation. This contention forms the subject matter of issue No. 2, which was allowed by me at the request of the parties to stand over as it appeared to me that the plaintiff's contention was prima facie correct. 4. The plaint proceeds to state that in pursuance of the agreement the plaintiff carried out her part of the contract, but the defendant in or about February 1947 engaged another artist for the role allotted to the plaintiff; that the defendant called upon the plaintiff to attend shooting and or rehearsals, but when the plaintiff attended she was not given any work and was kept idle. The plaintiff states that in March, 1947, the defendant falsely alleged breaches of the agreement on the part of the plaintiff and wrongfully terminated the contract of service and refused to pay to the plaintiff or her father the salary due to her. The plaintiff states that the agreement was entered into by her father for and on behalf of the plaintiff and that the same was for her benefit and that she was ready and willing to perform her part of the agreement, but the defendant prevented the plaintiff from earning her salary during the remainder of the term whereby she suffered damages to the extent of Rs. 8,708-10-0. The damages are computed on the footing of the difference between Rs. 9,500, being the amount agreed to be paid to the plaintiff under the agreement dated
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January 15, 1947, and the sum of Rs. 791-5-4 which was the amount received by the plaintiff from the defendant. 5. By his written statement the defendant says that the parties to the agreement were the plaintiff and the defendant. The defendant states that he has no personal knowledge as to whether the plaintiff is or at the date of the agreement was a minor. He further says :
As the plaintiff states that at the date of the said agreement the plaintiff was a minor the defendant submits that the said agreement is void in law and not enforceable and the plaintiff is not entitled to maintain this suit in respect thereof. In the alternative and in the event of its being held that the agreement was arrived at between the defendant and the plaintiff's father Dhiraj Singh, the defendant will submit that the plaintiff being not a party to the agreement is not entitled to sue in respect thereof.
6. By para. 2 of his written statement the defendant submits that the terms of the agreement having admittedly been reduced to writing, no oral evidence is admissible of the terms thereof. Without prejudice to his aforesaid contention, the defendant denies that on or about January 15, 1947, or at any time there was any oral agreement arrived at, between the defendant and the plaintiff's father Dhiraj Singh Muramal as alleged or otherwise on behalf of or for the benefit of the plaintiff. The defendant denies that the plaintiff was always ready or willing to perform her part of the agreement and says that the breach of the contract was committed by the plaintiff. 7. The defendant has filed his counterclaim for the recovery of a sum of Rs. 5,000 as damages sustained by the defendant by reason of the plaintiffs breach of the contract. In para. 10 of his written statement the defendant says that he will maintain his counterclaim only in the event of this Honourable Court holding that the agreement is valid and enforceable in spite of the fact that the plaintiff was a minor at the date of the counterclaim. 8. On these pleadings the following issues were raised :
(1) Whether the defendant entered into an oral agreement with the plaintiff's father as alleged in para. 1 of the plaint ? (2) Whether the terms of the oral agreement having been reduced to writing, any oral evidence is admissible as to the terms of the alleged oral agreement ? (3) If the agreement was with the plaintiff's father, whether the plaintiff is entitled to maintain this suit? (4) Whether at the date of the agreement, the plaintiff was engaged by Messrs. Kanu Desai Productions; and if so, whether the defendant knew and did not object to the same ? (5) Who committed a breach of the said agreement ? and (6) What is the amount, if any, payable by one party to the other ?
9. At the hearing before me the parties requested me to try issue No. 3 as a preliminary issue. That was on the footing and on the assumption that the defendant had entered into an oral agreement with the plaintiff's father as alleged in para. 1 of the plaint and that the plaintiff was then a minor. I agreed to try this issue as a preliminary issue in order to save the cost of the hearing of the other issues, which would mean a protracted hearing and when would compel me, in my judgment, to make remarks against the plaintiff or the defendant affecting their reputation in their profession, which I would like to avoid. 10. It is stated in the plaint that the contract was entered into by the plaintiff's father for and on behalf of the plaintiff. Now under Section 183 of the Indian Contract Act, a minor is not entitled to employ an agent. The contract, therefore, though it is made for and on behalf of the minor by a person who purported to act as his agent, is not the contract of the minor. In fact under Section 11 of the Contract Act a minor cannot enter into a contract. Therefore, in order that then; should be a contract, it must be a contract entered into with the guardian of the minor by the other party to the contract. 11. Two questions, however, of considerable importance arise in such a case :
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(1) What is the consideration for such a contract ? and (2) What is the measure of damages for breach of such a contract?
Section 2(a) of the Contract Act provides as follows :

When one person signifies to another his willingness to do or to abstain it of doing anything, with a view to obtaining the assent of that other to such act or abstinence, lit1 is said to make a proposal.
The words "to do" in Section 2(a) include to my mind a proposal and an undertaking that someone else shall, at the request of the proposer, do something. Under Section 2(b) a proposal, when accepted, becomes a promise. Under Section 2(d) when, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise. Under Section 2(e) every promise and every set of promises, forming the consideration for each other, is an agreement. Under Section 2(f) promises which form the consideration or part of the consideration for each other are called reciprocal promises. Under Section 2(g) an agreement not enforceable by law is said to be void. Under Section 25 an agreement made without consideration is void except in the cases mentioned in that paragraph. 12. Bearing these elementary propositions in mind, what I have got to decide is : what was the consideration for the agreement if any arrived at between the plaintiff's father and the defendant? The promise of the father that the, plaintiff would serve and the promise of the defendant that he would in that case pay the plaintiff her salary will be sufficient to constitute an agreement. But what was the consideration for which the defendant promised to pay the plaintiff her salary ? In my opinion it was not the bare promise of the plaintiff's father that the plaintiff will serve the defendant in terms of the contract, and his liability to pay damages for breach of that undertaking which formed the consideration, but the real consideration, or at least a part of the real consideration, was the promise of the plaintiff to serve in terms of the agreement between the plaintiff's father and the defendant. If the plaintiff instead of having been a minor had been a major, such promise to strive would form good consideration within the meaning of Section 2(d) of the Contract Act, though the consideration moved from a third party. Under Section 11 the plaintiff was not competent to enter into a contract and, therefore, her promise would not be enforceable against her. In my opinion, therefore., the plaintiff's promise to serve supplies no consideration and the contract was therefore void. 13. I came to the above conclusion on a bare reading of the relevant sections. But I find on going through the authorities that my view is fortified by the expression of the opinion of the learned Judges reported in Raghava Chariar v. Srinivasa Raghava Chariar. I.L.R. (1916) Mad. 308 Srinivasa Ayyangar J. at p. 823 says :
It is no doubt true that if the infant is incapable by reason of tender age of assenting to a proposal, there can in fact be no contract at all. As pointed out in Parsons on Contract, Volume 1, page 340, 'an infant, using the word in its common meaning, that of a child who had not left its mother's arms, cannot make a contract in fact.' The question then, whether a minor who has assented to a proposal and has therefore become a promisee, is entitled to enforce the promise, depends upon the question whether the promise is supported by consideration. This rule would equally apply to mutual promises.
At p. 324 his Lordship says :

Where the consideration for the promise of the adult is a promise by the minor, inasmuch as the minor cannot make a promise enforceable in law, the consideration necessarily fails, and the promise of the adult does no t therefore become a contract; as a learned writer says : 'The promise of infants should never have been held to be promises in law or to constitute a consideration for another promise.
14. In my opinion there being absence of the consideration contemplated by the parties, there was no contract between the plaintiff's father and the defendant which was enforceable at law, and there is no breach of a contract in respect of which the plaintiff's father or the plaintiff can sue for damages. I have set out above the paragraphs of the plaint and the terms of the contract annexed to the plaint which show clearly to ray mind that the entire consideration for the agreement was the plaintiff's promise to serve. But in fact the plaintiff's promise did not constitute any consideration in law and therefore there was in law no contract.
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15. Assuming that the bare promise and undertaking of the plaintiff's father to the defendant formed' a consideration for the defendant's promise to pay the plaintiff her salary, what would be the measure of damages in such a case ? This question was considered by Kemp J. in a case reported in Abdul Razak v. Mahomed Hussen (1916) 19 Bom. L.R. 164 In that case the plaintiff Abdul Razak sued the defendant Mahomed Husen for breach of an agreement whereby the defendant agreed to give his daughter in marriage to the plaintiff. Kemp J. held that in suits of this nature between Mahomedans the plaintiff cannot recover the damages peculiar to an action for breach of promise of marriage under the English law. This case is referred to by Beaumont C.J. in his judgment in Khimji Kuverji v. Lalji Karamsi. (1940) 43 Bom. L.R. 35 The relevant passage is at p. 45, where Beaumont C.J. says as follows :
In Abdul Razak v. Mahomed Huisen a Muslim father of the bridegroom sued the father of the bride for damages for breach of his contract to give his daughter in marriage. That was a case of a contract between the two parents, and Mr. Justice Kemp decreed the suit but held that the measure of damage must be based on the damage suffered by the plaintiff's father, and not on the damage suffered by the prospective bridegroom in the loss of a wife; and if such a suit lies, I agree with the view of Mr. Justice Kemp as to the measure of damage.
It seems that Beaumont C.J. was in error in thinking that in Abdul Razak v. Mahomed Hussen the plaintiff was the father of the bridegroom and that the contract was between the respective parents of the prospective bridegroom and the bride. The plaintiff in fact was the bridegroom himself, but I respectfully agree with the view of Beaumont C.J. 16. In my opinion if the only consideration for the contract was the promise of the plaintiff's father that the plaintiff shall serve the defendant, then the damages which the plaintiff's father could have recovered from the defendant in a suit filed by him against the defendant would be the damages sustained by the plaintiff's father himself. I do not see any principle of law under which the plaintiff, who is not bound by the agreement, can obtain higher damages than what the plaintiff's father could himself have recovered had he chosen to file the suit, simply because the plaintiff may be permitted by law to sue in her own name in respect of such a contract. It is clear on looking at the particulars of damages that what the plaintiff seeks to recover is damages sustained by herself and not by her father. Those damages, in my opinion, the plaintiff cannot recover. 17. I shall now consider whether there is any provision in any of the text books or any of the Indian statutes or whether there are any judgments of the Courts in India which should lead me to hold that contracts of service entered into by or on behalf of minors are valid and binding. Trevelyan on Minors, Sixth Edition, at p. 20, says this :
A minor can recover for work and labour done by him and for money paid by him, and money had and received for his use. He can also recover compensation for a non-gratuitous act done by him from the person enjoying the benefit of such act (see Section 70 of the Indian Contract Act) as for instance he can recover wages or payment for piece-work, or work as a servant (see section...32 of the Presidency Small Cause Courts Act (XV of 1882)... A minor may enter into a contract of apprenticeship, but he cannot be sued thereon [See Pol' lard v. Bouse I.L.R. (1910) Mad. 288
18. The Apprentices Act (XIX of 1850) is the only Act, so far as I can see, which provides for contracts in the nature of contracts of service which are binding on minors. That Act was passed, as the preamble to the Act shows, "for better enabling children, and especially orphans and poor children brought up by public charity, to learn trades, crafts and employments, by which, when they come to full age, they may gain a livelihood." It contains special provisions which I need not set out herein at length. Under Section 1 of that Act any child, above the age of ten, and under the age of eighteen years, may be bound apprentice by his or her father or guardian to learn any fit trade, craft or employment, for such term as is set forth in the contract of apprenticeship, not exceeding seven years, so that it be not prolonged beyond the time when such child shall be of the full age of twenty-one years, or, in the case of a female, beyond the time of her marriage. By Section 8 of the Act it is provided that every contract of apprenticeship shall be in writing, according to the form given in the schedule (A) annexed to this Act, or to the like effect, etc. Section 9 requires that every such contract shall be signed by the person to whom the apprentice is bound, and by the person by whom he is bound, and by the apprentice, when he is of the age of fourteen years or more at the time of binding. The form of the agreement annexed to schedule A to the Act is as follows :
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This agreement made the...between A.B., of...and C.D., of...witnesseth that the said A.B., doth this day bind E.F., a boy (or girl) of the age of...years completed, son (or daughter) of the said A, B. to dwell with and serve the said C.D., as an apprentice,...during all which term the said apprentice shall duly and faithfully serve the said CD.,.,.and the said C.D., in consideration of the premium or sum of...paid by the said A.B., to the said CD., and of faithful service of the said E.F., doth covenant and agree with the said A.B. that he will teach or cause to be taught to the said E.P., in the best way and manner that he can, the trade of a...during the said term; and will also, during the said term, find and allow unto the said apprentice good, wholesome and sufficient food, clothes, lodging, washing, and all other things necessary, fit and reasonable for an apprentice : and further, (here insert any special covenants).
Section 10 of the Act provides that no such contract shall be valid unless it be executed in the manner aforesaid. 19. The Form of the agreement clearly shows that though the agreement may be signed by the apprentice as required by the Act, the agreement is entered into between the employer and the father or other relation of the minor who contracts on behalf of the minor that the minor shall serve the employer. In view of this, it is difficult to understand why Trevelyan says that a minor may enter into a contract of apprenticeship. 20. In the Fourth Schedule to the Civil Procedure Code (Act XIV of 1882) there is a Form annexed as Form No. 65. (This Form is not reproduced in the Schedule to the Civil Procedure Code, Act V of 1908), It is the Form of a plaint where the apprentice sues the employer. That Form states as follows :
That on the...day of...at...the Defendant entered into an agreement with the plaintiff and his father E.F. and that the plaintiff entered into the service of the defendant with him after the manner of an apprentice, etc.
Here again it is difficult to see why the agreement is said to be with the plaintiff. The question whether a minor can bring e suit in respect of a contract of apprenticeship or of service entered into on his behalf by his father or guardian is not free from difficulty, and I propose to consider that question later on. To my mind the provisions of the Apprentices Act must be strictly limited to the cases therein provided. So far as this suit is concerned, suffice it to say that the contract in suit is not a contract of apprenticeship. 21. In English law contracts of service and apprenticeship are put on the same footing and are put in the same category as contracts for necessaries. In Purshotamdas Tribhovandas v. Purshotamdas Maiigaldas I.L.R. (1896) 21 Bom. 23 Candy J. at p. 33 says :
A contract of a father to give his daughter in marriage is analogous to the contract of a father apprenticing his son and binding himself for the performance by his son of all and every covenant on his part.
At the proper time I shall consider whether the contract of marriage is analogous to and stands on the same footing as the contract of apprenticeship in every respect. 22. In Fernandez v. Gonsalves (1924) 26 Bom. L.R. 1033 Taraporewala J. after referring to the above observations of Candy J. in Purshotamdas Tribhovandas v. Purshotamdas Mangaldas says as follows at p. 1045 :
The question there considered was not the liability of the minor but of the father. But what I am concerned with here is the well recognized principle that the father can enter into a binding contract for the benefit of his minor child which contract is enforceable at law. A contract of apprenticeship is held to be good because it is considered to be for the benefit of the minor; in the same way a contract of marriage is for the benefit of the minor, and I see no reason why a father should not be held to have power to make a contract of marriage on behalf of his minor child. I have not been able to find in the English reports a single case where the father has entered into a contract of marriage on behalf of his minor child. However to my mind in India the Court would be justified in applying the principles of contracts of apprenticeship in England in so far as to hold that the contract of marriage in India stands on the same footing as being one for the benefit of the minor and being one which the father can enter into on behalf of the minor. Neither a contract of personal service nor a contract of marriage can be ordered to be specifically performed so that in either case the apprentice or the girl cannot be compelled to carry out his or her part of a contract against his or her wishes. However, if it is an enforceable contract, the
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other result, namely, the liability in damages of the party making the breach of the contract, would follow.
23. Both these judgments fail to notice that in India a contract of apprenticeship is valid because of the express provisions of the Apprentices Act (XIX of 1850) and only as provided for by that Act. In view of those observations, however, I have carefully considered whether the contract of service stands on the same footing as a contract of apprenticeship or a contract of marriage of a minor. For the reasons I have set out in this judgment I am constrained to hold that the contract of personal service does not stand on the same footing as the contract of apprentice or a contract of marriage of a minor. 24. I have not come across any case decided in any of the High Courts in India where the legal position in reference to the contract of service concerning a minor was decided or considered, and I have therefore to decide this case on the sections of the Indian Contract Act only, cited above. 25. I have hitherto carefully avoided considering the position in English law as regards contracts of infants. But I think it is necessary, in spite of the vital difference in English law and Indian law on this point, briefly to set out the position in English law. 26. Simpson on the Law of Infants, fourth edition, at p. 7, says :
The acts of an infant fall under three heads, according as they are (1) void, (2) voidable, or (3) binding.
Section 1 of the Infants Relief Act, 1874, makes void many contracts by infants which were formerly voidable only. It is in the following words :
All contracts,...henceforth entered into by infants for the repayment of money lent or to be lent, or for goods supplied or to be supplied (other than contracts for necessaries), and all accounts stated with infants, shall be absolutely void.
Halsbury in Volume XVII, page 604, paragraph 1301, states as follows :

At common law, an infant's contracts are, in general, voidable at the instance of the infant, though binding upon the other party. Exceptions to this rule are contracts for necessaries, and certain other contracts such as contracts of service and apprenticeship, if they are clearly for the infant's benefit; such contracts are good and binding upon an infant. Contracts which are obviously prejudicial to an infant are wholly void.
27. In English law contracts of service and apprenticeship are put on the same footing as contracts for necessaries. In Coke upon Littleton, 172A, the note as to the power of an infant to bind himself by a writing states that there are some exceptions to his general inability, as "an infant may bind himself to pay for his necessary meat, drink, apparel, necessary physic, and such other necessaries, and likewise for his good teaching or instructions, whereby he may profit himself afterwards." If, therefore, there is a contract of service or apprenticeship, which is for the benefit of the infant, it would, according to English law, be enforced against the infant whether the contract was entered into by the infant or on behalf of the infant. A notable instance of the enforcement of such a contract against the infant is to be found in the case of Roberts v. Gray. [1913] 1 K.B. 520 In that case Cozens-Hardy, Master of the Rolls, says that the doctrine of an infant's contract for necessaries being binding was applied not merely to bread and cheese and clothes, but to education and instruction. In that case of Roberts v. Gray, John Roberts who became well known for his reputation as a great billiard player entered into an agreement with Joseph Gray and Harry Gray, the father of Joseph Gray, that Joseph Gray should accompany John Roberts on a tour of the world as professional billiardists. It was held by the Court of Appeal that the education which a billiard player of the receptive capacity of Joseph Gray would get from playing continually month after month with John Roberts was so valuable that it amounted to necessaries in the sense of a labour and education contract. It was held in terms that the contract was for necessaries. In that case 1500 damages was awarded against the defendants. Joseph Gray appealed against the judgment of the Lord Chief Justice who awarded those damages against him in the first instance, but the Court of Appeal dismissed the appeal. 28. Now though according to English law the minor would be liable in the case of a contract of service where the
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contract was for his benefit, it is clear that under Section 11 of the Indian Contract Act the minor's contract being void, the minor would not be held liable (see Mohori Bibee v. Dhurmodas Ghose,) (1902) L.R. 30 IndAp 114 29. The contract of apprenticeship entered into by the guardian is protected by the Apprentices Act (XIX of 1850) provided the case falls within the terms of that Act, but no such exception is made in the case of contracts of service. I realize that as a result of this judgment minors may lose the benefit of contracts of service which have been considered so beneficial to them as to be put in the category of necessaries. I am, however, not concerned with the policy of the Legislature under which all contracts of minors were made void and therefore unenforceable by or against the minor. 30. Section 68 of the Indian Contract Act, which falls under the Chapter dealing with certain relations resembling those created by a contract, says that if a person incapable of entering into a contract 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. Apart from that, the minor is not personally liable though his property may be made liable where the contract is made by his guardian who has the authority to bind his property. It is held that the minor is not liable under Section 70 of the Indian Contract Act for breach of an implied contract: see Bankey Behari Prasad v. Mahendra Prasad. I.L.R. (1940) pat. 739 31. As the minor's contract is a void contract, he is not entitled to sue for damages for breach of such contract including the contract of service where the contract was entered into by the minor himself. The rights which a minor may gain under Section 70 of the Indian Contract Act are rights which, strictly speaking, do not arise by virtue of the contract made by the minor but by reason of the relationship resembling those created by a contract. It has been held in certain cases that where the minor has already given the full consideration to be supplied by him, he is entitled to enforce the contract: see Hanmant Lakshman v. Jayarao Narinha I.L.R. (1888)13 Bom. 50 Kaghava Chariar v. Srinivasa Raghava Chariar I.L.R. (1916) Mad. 308; and Abdul Ghaffar v. Piare Lal-Salig Ram. (1934) I.L.R. 16 Lah. 1. I am not concerned with those cases because the contract that I am considering is an executory contract where the consideration is still to be supplied and has not already been supplied as in those cases by the minor. 32. If then a minor cannot sue on a contract of service entered into by him personally, is he entitled to sue for obtaining practically the same relief, simply because the contract has been entered into for and on his behalf and for his benefit by his guardian? I have already referred to the fact that a minor cannot employ an agent, and, therefore, it cannot be said that the contract was entered into "for and on his behalf" in that sense. The expression "for his benefit" is easily understood when one is speaking of a minor's contract according to English law, for there the contract is held binding on the minor, if it is for the benefit of the minor. But according to Indian law the contract is not binding on the minor, and, therefore, on the ground of want of mutuality, one should hesitate considerably before such a contract is held binding on the other side. I am prepared to concede that such contracts of service may be "for the benefit of the minor." But are they therefore binding on the other party ? "Or is the minor entitled to sue in respect of such contracts ? This brings me to a consideration of the cases in which a third party has been held entitled to sue in his own name in respect of a contract made by two parties under which contract the third party gets a benefit, or which contract is made "for his benefit." 33. I shall first consider the question of the third party's right to sue on such a contract on first principles. When a contract is arrived at between A and B, what induces A to enter into the contract with B is not only the advantage which A will derive but also the fact that B is a reasonable man and that he is a man of financial stability and a respectable man. It does seem to be hard on A that when he binds himself by his promise to B only, he should be held liable to C also in a case where a benefit under the contract is reserved for C, with the consequence that he would be liable to two actions in respect of the same promise. It is a matter of common experience that the next friend of a minor or a lunatic bringing a suit is not always reasonable in the conduct of the suit. The case becomes a case of greater hardship if C is not lunatic but is inclined to behave like a lunatic. It would therefore seem unfair to impose a contractual liability on A towards C which lunatic he had not undertaken to discharge at the instance of C. Under the abovementioned agreement B had only conferred an authority upon A to pay the money to C, but that authority may be revoked by B at any moment. It may be that left to himself B may not have sued A. Why should then C be entitled to sue A merely because of a benefit provided for by B in his contract with A? Is he entitled to do so even against the whish of B or where there is no evidence that B has authorized C to sue A ? in the case where a
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trust is created by B and A has accepted that trust and A has accepted the position of a trustee towards C, C acquires a right of property in himself and he would there fore be entitled to sue A irrespective of the consent of B or even against the wish of B. Apart from such a case and the other cases which form an exception to the general rule, it is B only who can sue A. 34. I shall next turn to the Indian Contract Act. The definition of "promisor" and "promisee" rigidly excludes the idea that the contract can be enforced by a person who is not a party to the contract, and there is nothing in Section 2 to encourage such an idea. It was so stated by Rankin C.J. in Krishna Lal Sadhu v. Pramila Bala Dasi. MANU/WB/0435/1928 : (1928) I.L.R. 55 Cal. 1315, 1326. 35. In Mir Sarwarjan v. Fakhruddin Mahomed Chowdhuri (1911) L.R. 89 IndAp 1 : s. c. 14 Bom. L.R. 5 the suit was brought by three plaintiffs (of whom the first was an infant by his next friend and duly appointed guardian) alleging that they were respectively the owners by right of inheritance of the property claimed in the plaint; that the defendant had agreed to sell them the property at a price; and they prayed for specific performance of the agreement. The Subordinate Judge passed a decree as prayed and the High Court affirmed it. This decision was reversed by the Privy Council. In that case one Mr. Garth was at the time of the purchase the manager of the estate of respondent No. 1 who was then a minor, and he entered into the contract with the appellant, (Mir Sarwarjan), as such manager. It was assumed before the Privy Council that the contract was not intended to bind the manager personally and that it was intended to bind the minor or the minor's estate. It was also assumed that the purchase was an advantageous purchase for the minor. Lord Macnaghten in his judgment at p. 6 says as follows :
It is not within the competence of a manager of a minor's estate or within the competence of a guardian of a minor to bind the minor or minor's estate by a contract for the purchase of moveable property, and they are further of opinion that as the minor in the present case was not bound by the contract there was no mutuality, and that the minor who has now reached his majority cannot obtain specific performance of the contract.
It would, therefore, seem that the mere fact that the contract is for the benefit of the minor does not entitle the minor to sue on the contract. The minor would have been entitled to specific performance of the contract if he had been a major instead of a minor; but being a minor, he could not sue as there was no mutuality in the contract. 36. In the case of Jamna Das v. Ram Autar Pande MANU/PR/0002/1911 the action was brought by a mortgagee to enforce against a purchaser of the mortgaged property an undertaking that he entered into with his vendor. It was held that the mortgagee had no right to avail himself of that as he was no party to the sale. The purchaser had entered into no contract with him and was not personally bound to pay this mortgage debt. It was held "that he was not a person from whom, in the words of the 90 the section of the Transfer of Property Act, "the balance is legally recoverable." 37. In Dunlop Pneumatic Tyre Company, Limited v. Selfridge and Company, Limited' [1915] A.C. 847 Lord Haldane says at p. 853 :
My Lords, in the law of England certain principles are fundamental. One is that only a person who is a party to a contract can sue on it. Our law knows nothing of a jus quaesitum tertio arising by way of contract. Such a right may be conferred by way of property, as, for example, under a trust, but it cannot be conferred on a stranger to a contract as a right to enforce the contract in personam.
38. In In re : Botherham Alum and Chemical Company (1883) 25 Ch. D. 103 Lindley L.J. says as follows at p. III :
But an agreement between A and B that B shall pay C, gives C no right of action against B. I cannot see that there is in such a case any difference between Equity and Common Law, it is a mere question of contract. It is said that Mr. Peace has an equity against the company because the company has had the benefit of his labour. What does that mean ? If I order a coat and receive it, I get the benefit of the labour of the cloth manufacturer; but does any one dream that I am under any liability to him ? It is a mere fallacy to say that because a person gets the benefit of work done for somebody else he is liable to pay the person who did the work.
39. In National Petroleum Company Limited v. Popatlal (1986) 38 Bom. L.R. 610 it was held that where A and B
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enter into a contract under which A agrees to indemnify B against all his debts, a creditor of B cannot sue A on the contract.
A person who is not a party to a contract is not entitled to maintain an action upon that contract. This rule is subject to well-recognised exceptions, e. g., a person who is not a party to a contract can sue on it if he is claiming through a party to the contract or if he is in the position of a cestui que trust or of a principal suing through an agent, or if he claims under a family settlement.
40. The fact that consideration may move from a third party does not involve the proposition that a third party can sue upon a contract." 41. In Great American Insurance Co. v. Madanlal Sonulal (1985) 37 Bom. L.R. 461 the head-note reads as follows :
The plaintiff was a minor and the sole surviving coparcener of a joint Hindu family. The business of the family was carried on by the plaintiff's sister's husband, who acted as his guardian. The guardian effected an insurance against fire with the defendant company on cotton bales belonging to the plaintiff in the plaintiff's name. Some of the bales having been destroyed by fire, the plaintiff sued by his guardian as his next friend to recover the amount of loss caused by fire from the defendant company. An issue was raised whether the contract of insurance was void on the ground of plaintiff's minority. It was held: (1) that the contract sued upon was not a contract which was made by a minor although it was made on behalf of the minor by a person who acted as his guardian; (2) that the plaintiff-minor having been a person for whose benefit the contract was made, was entitled to sue on the contract; (3) that, therefore, the defendant company had no defence to the suit.
This case has been subjected to the following criticism in Mulla's Contract Act, p. 64 :
The principle on which this decision is based is not altogether easy to understand. If the guardian contracts as the minor's agent, it is the minor's contract and therefore a nullity. If it is the guardian's contract, he should alone be entitled to sue, though he may be under an obligation to hold any benefit under the contract for the minor's benefit.
I must point out that in that case (Great American Insurance Co. v. Madanlal) the guardian had taken out the policy of insurance in then are of Surajmal Sonulal, which was the name in which the joint Hindu family of which the minor was the sole surviving coparcener was carrying on business in cotton and other commodities. The guardian therefore was acting in the position of a trustee and the plaintiff was occupying the position of a cestui que trust. The defendant company knew that the business was carried on by the minor and by reason of the fact that they issued the policy in the name of Surajmal Sonulal, they undertook an obligation not only towards but to the minor for the payment of the loss. The Contract was not one which the guardian could set aside at his will. He could not hold the moneys received from the insurance company for his own benefit or make it payable to someone else. The guardian had the authority to insure the property and to recover from the property of the minor the premium, if paid by him, though, as Beaumont C.J. points out, the premium was presumably paid from the minor's property. The insurance company could recover the premium if unpaid from the minor's property. It was therefore the minor who supplied the consideration for the insurance company's promise to pay the amount of the loss to him. As the guardian was in the position of a trustee acting for the minor, the moneys recovered by the guardian would be held by him as trust moneys and not as his own property which would devolve on the Official Assignee on his insolvency. On the face of the policy the insurance money was payable to the minor. The substantive right to sue was in the minor. The omission to join the guardian as a party to the suit did not make any difference as the insurance company on payment to the minor of the loss pursuant to the decree of the Court would obtain a complete discharge of their liability under the policy. 42. In Les Affreteurs Reunis Societe Anonyme v. Leopold Walford (London) Limited [1919] A.C. 801 the facts were these. "It is usual for a charter-party to provide that a commission shall be payable to the broker by whom the charter is negotiated. The broker is not a party to the charter-party, and it is the practice for the charterer, if necessary, to sue the shipowner for the amount of the broker's commission as trustee for the broker." In that case the action had been brought by the broker himself, but by consent it was treated as brought by the charterers as trustees
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for him. The House of Lords recognized the practice and gave judgment in his favour. At p. 806 Lord Chancellor Birkenhead says :
My Lords, so far as I am aware, that case (Robertson v. Wait, 8 Ex. 299) has not before engaged the attention of this House, and I think it right to say plainly that I agree with that decision and I agree with the reasoning, shortly as it is expressed, upon which the decision was founded. In this connection I would refer to the well-known case of In re Empress Engineering Company (16 Ch. D. 125). In the judgment of Sir George Jessel M.R., the principle is examined which, in my view, underlies and is the explanation of the decision in Robertson v. Wait. The Master of the Rolls uses this language : 'So, again, it is quite possible that one of the parties to the agreement may be the nominee or trustee of the third person. As Lord Justice James suggested to me in the course of the argument, a married woman may nominate somebody to contract on her behalf, but then the person makes the contract really as trustee for somebody else, and it is because he contracts in that character that the cestui que trust can take the benefit of the contract.
43. I am bound by the decision of the Appeal Court in Great American Insurance Co. v. Madanlal Sonulal (1935) 37 Born. L.R. 461 but I am also of the opinion that that case was rightly decided. Even if the contract in that case had been entered into by the minor himself and he had already paid the premium, the minor would have been entitled to recover the loss on the authority of the cases already referred to by me. The head-note in that case (Great American Companys case) says "that the plaintiff-minor having been a person for whose benefit the contract was made, was entitled to sue on the contract." I am, however, not inclined to read that observation, for the reasons hereinafter set out, as laying down that in every case where a contract is made for the benefit of the plaintiff-minor, the minor would be entitled to sue on the contract. 44. It was at one time thought that if the person who was to take a benefit under the contract was nearly related by blood to the promise a right of action would vest in him. The case of Tweddle v. Atkinson (1861) 1 B. & S. 393 is conclusive against this view. 45. In Shanhar Vishvanath v. Umabai I.L.R. (1813) 37 Bom. 471 it was held that though the insurance policy was a contract between the deceased and the insurance company expressed to be for the benefit of the wife of the assured, it was within the power of the assured at any time to put an end to the contract by ceasing to pay the premia or otherwise to defeat the expectation of his wife by assigning the policy to a creditor. He could divest himself of his beneficial interest in the policy only by an assignment in writing or by a signed declaration of trust. It was held that there was nothing in the Contract Act to show an intention that a person not a party to the contract can sue on it. At p. 479 Scott C.J. said :
There is however nothing in the present case to show that the plaintiff was either the promisor or the promisee and therefore a party to the agreement. There is nothing in the Act to show an intention that a person not a party to the contract can sue on it,. So far as it goes Section 2(i) is an indication to the contrary.
This case was followed in Krishna Lal Sadhu v. Pramila Bala Dasi. I.L.R. (1928) Cal. 1315 46. In Adhar Chandra Mandal v. Dole Gobinda Das I.L.R. (1936) 63 Cal. 1172 it was held that a stranger to a contract cannot take the benefit of the contract between two other persons reserving a benefit to him, unless from the terms of the contract it is clear that a trust for him is intendedsee also Jnan Chandra Mukherji v. Mano Ranjan Mitra [1941] 2 Cal. 576 and Subbu Chetti v. Arunachalam Chettiar I.L.R. (1929) Mad. 270 47. In principle I do not see any distinction whether the benefit reserved under the contract is the benefit reserved for a minor, or for a married woman, or for any other person. In law a trust in favour of such third party does not arise merely because a benefit is provided for him or her. Therefore in my opinion a contract made by the father of a minor including a contract of apprenticeship or service is not a contract which the minor is entitled to sue on, on the ground that it is for his benefit, where the contract is executory and the full consideration payable by or on behalf of the minor is not paid. The work that the minor in the case before me did for a month or two was of no use to the defendant who promised to pay to the plaintiff Rs. 9,500, only if she completed the picture.
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48. This brings me to a consideration of contracts of marriage of minors entered into by the father or guardian of the minor. I am of the opinion that contracts for marriage stand in a class by themselves. Rankin C.J. in the case above cited (Krishna Lal Sadhu v. Pramila Bala Dasi) says at p. 1327 :
I say nothing as to whether special rules of law may be applicable to communities among whom marriages are contracted for minors by parents and guardians. But putting aside such cases, I see no reason to think that the law in India contains a series of exceptions to the principles that a contract can only be sued upon as such by a party thereto.
49. In Fernandez v. Gonsalves MANU/MH/0126/1924 : AIR1925Bom97 Taraporewala J. was considering the question of a contract of marriage entered into by the plaintiff's father with the defendant. The parties in that case were Native Christians or Goans, Taraporewala J., referring to the case of Mohori Bibee v. Dhurmodas Ghose (1902) L.R. 30 IndAp 114 says this at p. 1038:
Whether their Lordships of the Privy Council would have applied the same principle to a contract of marriage is to my mind very doubtful; and, so far as I am concerned, unless there is an authority on the point which is absolutely binding on me, I am not prepared to hold that the contract of marriage made on behalf of a minor by a person, who is the natural guardian of the minor and who is the only person who could enter into such a contract, is void. The principle on which I hold the contract in this case valid is the principle which has been laid down subsequent to the Privy Council decision in cases where the Courts in India have tried to give the force of contract to agreement made by the guardian of a minor for his behalf, where the guardian has power to enter into such agreement so as to bind the minor and the agreement is for the minor's benefit.
At p. 1040 Taraporewala J. says :

It is considered in this country a sacred and essential duty of the parents and guardians, particularly of girls, to see that they are settled down in life by proper marriage, (The plaintiff in that case was a girl.)...1 consider these Indian Christians and Goans, so far as the duty of making contract of marriage is concerned, on the same footing as Hindus or Mahomedans and other communities in India, and on that footing I come to the conclusion that it is the duty of the parents to make a contract of marriage for their daughters, and that, therefore, they can make a binding contract on behalf of their daughters.
At p. 1042 he says :
The principle which the Court has to consider is this : has the guardian power to enter into the contract on behalf of the minor so as to bind the minor; and, secondly, whether the contract is for the benefit of the minor. If either of the two essentials is wanting, there would not be a contract enforceable at law, and, if both these essentials are present, it would be a contract enforceable at law. By this decision I make the contract binding on the minor which is not done in England. But to my mind, considering the difference between the social customs and manners of people in England and in this country, there is much less hardship and much less harm in my holding that the natural guardian of a minor is entitled to make a contract of marriage binding on the minor than to hold otherwise; as to hold otherwise would mean that no one could make a contract of marriage for his minor daughter for fear that the other party may at any time put an and to it without incurring any liability. The breach of a promise of marriage has much more serious consequences in India in the case of girls, inasmuch as the chances of the girl making another good match are seriously affected. I for my part am not disposed to read that result in the Privy Council judgment. In my opinion it would be revolutionizing the manners and customs of the people here if I were to hold that a contract of marriage could not be entered into by a natural guardian for a minor girl.
50. In Mulji Thakersey v. Gomti and Kastur I.L.R. (1887) 11 Bom. 412 plaintiff No. 1 was the father of plaintiff No. 2 and defendant No. 1 was the mother of defendant No. 2 who was her daughter. It was held that defendant No. 1 had committed a breach of the agreement by not giving her daughter (defendant No. 2) in marriage to plaintiff No. 2, and a decree was passed against defendant No. 1 for inter alia damages for breach of the contract. But the suit against defendant No. 2 was dismissed as it was held that defendant No. 2 being a minor, was not liable in respect of that contract. This judgment was not cited before Taraporewala J. In view of the judgment in Mulji Thakersey v. Gomti and Kastur I.L.R. (1887) 11 Bom. 412 it is difficult to see how Taraporewala J. held that the guardian had the
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power to enter into the contract of marriage on behalf of the minor so as to bind the minor. 51. In Waghela Rajsanji v. Shekh Masludin MANU/PR/0032/1887 the Privy Council said at p. 96 :
Now it was most candidly stated by Mr. Mayne, who argued the case on behalf of the respondent, that there is not in Indian law any rule which gives a guardian and manager greater power to bind the infant ward by a personal covenant than exists in English law. In point of fact, the matter must be decided by equity and good conscience, generally interpreted to mean the rules of English law if found applicable to Indian society and circumstances. Their Lordships are not aware of any law in which the guardian has such a power, nor do they see why it should be so in India. They conceive that it would be a very improper thing to allow the guardian to make covenants in the name of his ward, so as to impose a personal liability upon the ward, and they hold that in this case the guardian exceeded her powers so far as she purported to bind her ward, and that so far as this suit is founded on the personal liability of the talukdar, it must fail.
52. In Maharana Shri Ranmalsingji v. Vadilal Vakhatchand (1894) I.L.R. 20 Bom. 61 it was held that a minor cannot be bound personally by contracts entered into by a guardian which do not purport to charge his estate and that Act XX of 1864 gave no power to a guardian or administrator to bind his ward by personal covenants. 53. The case of Fernandez v. Gonsalves MANU/MH/0126/1924 : AIR1925Bom97 was approved by the Appeal Court in Khimji Kuverji v. Lalji Karamsi (1940) 43 Bom. L.R. 35 though nothing is stated about what Tarapore-wala J. described as the first essential, i.e. "the power of the guardian to enter into the contract on behalf of the minor so as to bind the minor." 54. The head-note of the case in Khimji Kuverji v. Lalji Karamsi reads as follows:
Amongst Hindus a contract of marriage entered into on behalf of a minor by the minor's legal guardian and shown to be for the minor's benefit is enforceable at the instance of the minor. Where a contract of marriage was entered into between the mother of the plaintiff, who was a minor Hindu girl, acting as her guardian and on her behalf, and the father of the defendant on behalf of the defendant who was a Hindu and a major; Held on consideration of the habits and customs prevailing amongst Hindus, that the contract being for the benefit of the minor girl could be enforced by her, and she could maintain a suit for damages for breach thereof by the defendant.
55. [note :The reference to the case of National Petroleum Co. v. Popatlal MANU/MH/0022/1936 : AIR1936Bom344 in the judgment of Beaumont C.J. at p. 46 of that report is a mistake for Great American Insurance Co. v. Madanlal Sonulal. MANU/MH/0011/1935 : AIR1935Bom353 56. It is the decisions as to the minor's right to sue for damages in cases of breaches of contracts of marriage that have caused me the greatest difficulty in arriving at the decision which I have ultimately arrived at in the case. In contracts of marriages as well as service, the contracts are by their nature executory, and they are entered into for the benefit of the minors. There is, however, the following point of distinction. A contract of marriage is not void for want of consideration as a contract of service by a minor is. The minor in the case of a contract of marriage is very often in this country of a very tender age. Even where the minor is of an understanding age, it is not the minor's promise, if any, to marry, which the other party relies upon for the performance of the contract. The only consideration for a marriage contract is the promise of the father that the minor will fulfil his contract by the minor's marriage at a future date, and the reciprocal promise of the other party to the contract. These reciprocal promises form the only consideration for each other and they result in a contract. The parties rely on the respectability of the father for the fulfilment of the contract. The father very often brings his personal influence to bear on the minor so that the father's contract may be honoured. Sometimes the minor carries out the father's promise at the cost of his personal happiness. In a contract of service, what the other party relies upon is the promise of the minor to serve and his actual service from day to day. The employer agrees to pay the salary specified not merely because the father has promised that the minor will serve in terms of the contract. In ray opinion a minor's contract of marriage is therefore not void for want of consideration as a contract of service by a minor is. 57. Is there no benefit that the minor derives by reason of my holding that such contracts of service are void
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according to Indian law? Contracts of service like other contracts to be carried out in futuro involve a certain element of speculation. It may be that a contract of service by a minor, which is beneficial at the date it is entered into, may by reason of change of circumstances not be beneficial to him at a future date. He may, while the contract is only partly executed, obtain better terms at a future date, and those better terms may be due to the very service he has put in under the first contract. I take it to be the English law that if a contract of service is beneficial to the minor at the date it is entered into, he is not entitled to repudiate it, because of the better terms he may obtain at a future date. In Indian law, the contract being void, he is at liberty to take up service on better terms, even while the first contract remains executory and unfulfilled. I realize that contracts of marriage of minors involve a greater amount of speculation than other contracts. One may go further and say that marriage is a gamble and not a mere matter of speculation. But contracts of marriage have been recognized by a series of decisions now extending over several years as valid, if they are entered into by the guardian for and on behalf of and for the benefit of the minor. For the reasons which I shall presently mention they must be held to be enforceable by the minors personally, even though they arc not enforceable against minors. 58. It being conceded that such a contract of marriage is valid, the next question is : is it right in principle that the minor by himself can sue the other party in respect of such a contract without joining the father as a party to the suit ? In principle there does not seem to be any objection. The father cannot set aside such a contract as he can set aside a commercial contract at his pleasure nor give the benefit of the contract to another party. The argument that the other party contemplated liability to the father only because he was the party to the contract is also devoid of substance. The principal liability of the other party in such a case is to the minor. The father's rights are in the nature of a trustee's rights, and they exist only for the benefit of the minors. If, for instance, ornaments and clothes are given by way of gift to the minor in pursuance of such a contract, the father's right to recover the same from the other party, if they are in his possession, is only for the benefit of the minor. So also damages which the father may recover in the case of a breach of contract must be held by the father for the benefit of the minor. If such damages are paid to the father by the other party, the moneys so lying in the hands of the father are not his property, and if he becomes insolvent, they would not vest in the Official Assignee as the assets of the insolvent. Though the father does suffer in his reputation by reason of the breach of contract of marriage, what he contracts for is not for the preservation of his reputation or happiness but for that of the infant. The other party contracts a direct obligation to the minor and undertakes to pay such damages as the minor (and not the father) may sustain. The cause of action then is complete in the minor and it is not necessary that the father should be joined as a party to the action. 59. The case of a contract of service stands on a different footing. So far as contracts of service are concerned, there is no reason why the father should not remit performance of it, if for instance he realizes that it is the minor and not the employer who is at fault. To allow the minor, represented by a next friend in the suit, to sue the employer in such a case would seriously prejudice the employer. But the main ground on which I hold that the contract of service entered into by a father on behalf of the minor is not enforceable, is that it is void for want of consideration. Besides the minor in a contract of service is not seriously prejudiced because, as I have stated before, he can always recover the amount of the salary actually earned by him or he may obtain employment on better terms, or an employment which is more suited to his temperament or natural aptitude. 60. I have carefully considered the expression "on behalf of and for the benefit of the minor" as used by our Appeal Court and Taraporewala J. in the case of suits by minors for the recovery of damages for breach of contracts of marriages; but I am not prepared to rely on that expression, when I am considering the case of a contract of service, as the deciding factor which should compel me to hold that the minor in the case of such a contract of service is entitled to sue in his own name. In my opinion the father of the minor in a contract of service does not occupy the position of a trustee within the meaning of the abovementioned decision of the House of Lords in Les Affreteurs Reunis Societe Anonyme v. Leopold Walford (London) Limited [1019] A.C. 801 though he does occupy such position in the case of a contract of marriage entered into by him on behalf and for the benefit of the minor. 61. I, therefore, decide issue No. 3 against the plaintiff. 62. July 22, 1948. After I pronounced my judgment on issue No. 3 on July 21, 1948, on coming to Court on July 22, 1 inquired of counsel whether it was not in the interests of parties that I should try issues Nos. 1 and 2 also. For instance, if on hearing evidence I came to the conclusion that the defendant did not enter into any oral agreement with
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the plaintiff's father as alleged in para. 1 of the plaint, the suit in my opinion would fail. The suit in not on the footing of a contract entered into by the plaintiff herself with the defendant, though it is the defendant's case that the plaintiff herself entered into the contract with the defendant and that the defendant was not aware of the plaintiff's minority. It is clear that entirely different considerations would apply if the plaintiff had filed this suit on that footing. I am not prepared to allow at this stage to convert the suit into a suit of that nature. Both counsel agreed with me and, thereupon, I decided to try issues Nos. 1 and 2 as preliminary issues along with issue No, 3. 63. If my judgment on issues Nos. 1 and 2 is against the plaintiff and it is held in appeal to be incorrect, the suit may be decided on issue No. 3. If my judgment, on the other hand, on issues Nos. 1 and 2, assuming it to be against the plaintiff, is correct, then a finding on issue No. 3 may be unnecessary. 64. At the request of Mr. C.J. Shah who says his witness on issues Nos. 1 and 2 is not in Court, I adjourn the suit to Monday, July 26, 1948. 65. July 26, 1948. At this stage counsel for the parties state that the suit has been settled. 66. Per Curiam, By consent suit dismissed. Counterclaim dismissed. No order as to costs. Manupatra Information Solutions Pvt. Ltd.
MANU/WB/1051/2012 Equivalent Citation: [2013]350ITR251(Cal), [2012]211TAXMAN144(Cal) IN THE HIGH COURT OF CALCUTTA IT Appeal Nos. 98, 99 & 265 of 2003 (Arising out of orders of Tribunal in ITA No. 698 of 1999 dated 28-112002 and ITA No. 1177 of 2000 dated 10-6-2003) Decided On: 30.08.2012 Appellants: Standipack (P.) Ltd. Vs. Respondent: Commissioner of Income Tax, Kolkata-IV Hon'ble Judges/Coram: K.J. Sengupta and Joymalya Bagchi, JJ. Counsels: For Appellant/Petitioner/Plaintiff: J.P. Khaitan, D. Mitra and S. Das For Respondents/Defendant: R.N. Bandhopadhyay, S.B. Sarof, Aniket Mitra, Siddartha Chatterjee, Dipak Som and Prithu Dindhuria Subject: Direct Taxation Catch Words Mentioned IN Acts/Rules/Orders: Code Of Civil Procedure, 1908 - Section 27; Income Tax Act, 1961 - Section 143(3), Income Tax Act, 1961 Section 37(1), Income Tax Act, 1961 - Section 73; Indian Contract Act, 1872 - Section 68
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Disposition: Appeal dismissed JUDGMENT Joymalya Bagchi, J. The aforesaid appeals have been heard analogously and are being disposed of by a common judgment and order since they relate to similar questions of law and facts. I.T.A. No. 98 of 2003 was admitted in respect of assessment year 1991-92 on the following questions of law :
(I) Whether on the facts and in the circumstances of the case the tribunal misdirected itself in law and it adopted a wholly erroneous approach in confirming the disallowance of overseas travel (Rs. 40,443/) and educational expenditure (Rs. 3,37,084-/) in the aggregate sum of Rs. 3,77,527/-incurred by the appellant/assessee company herein in respect of his trainee employee, Sri Saumya Meattle and whether its findings on the aforesaid issue are vitiated in law having been recorded by it without any material and/or in disregard of the undisputed material facts including the relevant and vital evidences on record and whether such findings are wholly unreasonable and/or otherwise perverse. (II) Whether on the facts and in the circumstances of the case the tribunal misdirected itself in law and it adopted a wholly erroneous approach in confirming the disallowances of Rs. 1,66,660/representing commission paid by the appellant/assessee company to M/s. Telecom Ancillaries Pvt. Ltd. and whether its findings on the aforesaid issue are vitiated in law having been recorded by it without any material and/or in disregard of the undisputed material facts including the relevant and vital evidences on record and whether such findings are wholly unreasonable and/or otherwise perverse. (III) Whether on the facts and in the circumstances of the case the and on a correct interpretation of Section 73 of the Income-tax Act, 1961 the tribunal misdirected itself in law and it adopted a wholly erroneous approach in confirming the disallowances of short term capital loss in the aggregate sum of Rs. 4,17,550/- suffered by the appellant/assessee company in purchase and sale of shares of M/s. Reliance Industries Ltd. and M/s. JCT Ltd. the two quoted Public Limited Companies and whether its findings on the aforesaid issues are vitiated in law having been recorded by it without any material and/or in disregard of the undisputed material facts including the relevant and vital evidences on record and whether such findings are wholly unreasonable and/or otherwise perverse.
1. I.T.A. No. 99 of 2003 was admitted in respect of assessment year 1993-94 on a question of law similar to question No. II in I.T.A. No. 98 of 2003 as follows :
Whether the tribunal could confirm the disallowance of Rs. 12,00,000/-representing payment made by the appellant/assessee company to M/s. Telecom Ancillaries Pvt. Ltd. on the erroneous Finding that the agreement was made on 25th March, 1992 not on 25th January, 1992 and thereby holding that this was entered at the fag end of the year and was not followed by a business necessity or expediency and even then the agreement would not eliminate competitors other than M/s. Telecom Ancillaries Pvt. Ltd. and hold that it was not an arrangement out of prudent business planning but was made to reduce tax liability and thus had come to a perverse finding.
I.T.A. No. 265 of 2003 was admitted in respect of assessment year 1996-97 on a question of law similar to question (I) in I.T.A. No. 98 of 2003, save and except the fact that the disallowance for overseas travel and educational expenses was to the tune of Rs. 3,043,591/- for the said assessment year. For the sake of convenience question No. I in I.T.A. No. 98 of 2003 and that in I.T.A. No. 265 of 2003 are taken up for consideration simultaneously. 2. The factual background from which such question of law emanates is set out hereinbelow. The appellant company was mainly engaged in the business of manufacturing and trading of corrugated sheets, curtains, flexible plastic bags and pouches, filling machines, filling of oil and other materials in plastic pouches and
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supplying them to Public Sector Oil Companies. The company also carried on investment in shares and securities of quoted companies. On or about 28.05.1990 the company appointed one Saumya Meattle, minor, aged about 17 years two months, who had passed the 10 + 2 examination as a trainee in the appellant company for a remuneration of 2000/- per month. In terms of his letter of appointment, Saumya Meattle was to join the company on or before 1st June, 1990. Within a few days from his date of joining, the company took a resolution in its Board meeting held on 04.06.1990 for sponsoring the aforesaid Saumya Meattle for advance study in Computer Science from University of South California Lose Angles, USA as an employee of the company on condition, inter alia, that he shall continue be an employee of the company for seven years after completing his course in USA and he along with his guarantor Ms. Gnan N. Swarup, would execute a surety bond for a sum of Rs. 2,00,000/- plus all costs and charges that shall/may be incurred by the company in that regard. Pursuant to such understanding it appears that a surety bond was got to be duly executed by the Saumya Meattle and Ms. Gnan Swarup as his guarantor. On attaining majority, the said Saumya Meattle by a further undertaking dated 21.08.1991 ratified his liabilities under the contract and the said bond. It is apposite to mention that even prior to his appointment the said Saumya Meattle made an application on 23.04.1990 to the banker for release of foreign exchange for studies abroad which was granted by the banker on 22.06.1990. Saumya Meattle completed his studies in the University of South California, USA and obtained a bachelor degree in the field of Computer Science in May, 1995. In the meantime, the company in its Board meeting held on 16.05.1994 took another resolution to sponsor the said Saumya Meattle for pursuing his Master Degree in Accounting at the self-same University, inter alia, on the condition that the said Saumya Meattle along with his guarantor Ms. Gnan Swarup shall execute fresh surety bond to the tune of Rs. 3,50,000/-plus all costs and charges that shall or may be incurred by the company in that regard and that he shall serve as an employee of the company for a minimum period of seven years after completing his degree. The said Saumya Meattle along with Ms. Gnan Swarup duly executed such bond and he successfully completed his course and obtained a Master Degree in Accounting from the said University on 12.05.1995. Thereafter, Mr. Meattle obtained practice training in the reputed International Private Company Group of Marlin, London as an intern from July, 1995 to July, 1996. 3. By letter dated 15.07.1996 the appellant company appears to have confirmed the service of Saumya Meattle with effect from the self-same date and it appears that thereafter Mr. Meattle worked in the appellant company. The company filed return of income for the assessment year 1991-92 showing a total income declaring an assessable income of Rs. 11,30,410/-. 4. The Assessing Officer after examining the relevant records and/or evidence produced in the course of the assessment proceeding completed income assessment for the said year and by the impugned assessment order dated 21.03.1994 passed under Section 143(3) of the Act determined total income of the appellant company for the said year to the tune of Rs. 22,14,416/- by inter alia disallowing the educational expenses and expenses of account of foreign travel undertaken by the company in connection with the aforesaid Saumya Meattle to the tune of Rs. 3,37,084/and Rs. 40,443/- respectively. 5. The assessee company appealed against such order before the Commissioner of Income-tax (Appeals) and the said Commissioner (Appeals) dismissed the said appeal by its order dated 19.02.1999. 6. Being aggrieved by the said appellate order dated 19.02.1999 the appellant company filed an appeal before the tribunal which was being I.T.A. 698 (Cal.) of 1999. The said appeal was heard along with another appeal filed by the appellant company being I.T.A. No. 699 (Cal.) of 1999 arising out of assessment year 1992-93 and both the appeals were disposed of by the learned tribunal by its impugned order dated 28th November, 2002. Hence, the present appeal being I.T.A. No. 98 of 2003 has been filed in respect of assessment year 1991-92. 7. Similarly, in respect of the assessment year 1996-97 the Assessing Officer passed an assessment order dated 30.03.1999 under Section 143(3) of the Income-tax Act by disallowing the overseas educational and training expenses to Saumya Meattle to the tune of Rs. 2,44,991 /- and his overseas travel expenses to the tune of Rs. 98,600/- for the said assessment year.
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8. Such order was also appealed before the Commissioner of Income-tax-X, (Appeals) Calcutta who dismissed the same by his order dated 09.03.2000 inter alia on the ground that on similar ground such disallowance had been confirmed in the earlier assessment year 1991-92, as aforesaid. The appellant company thereafter approached the tribunal against the said order of CIT (Appeals). The tribunal dismissed the said appeal being I.T.A. No. 1177 (Cal.) of 2000 by impugned order dated 10th June, 2003 in view of its earlier order dated 28th November, 2002 passed in respect of the assessment year 1991-92 in I.T.A. No. 698 (Cal.) 1999, as aforesaid. The present appeal being I.T.A. No. 265 of 2003 has been filed challenging the said order of the tribunal in respect of assessment year 199697. 9. Hence in both these appeals the self-same issue falls for decision as to whether the confirmation of disallowance of overseas educational expenses and foreign travel expenses undertaken by the appellant company in respect of its trainee Saumya Meattle was vitiated in law or was based on findings which are wholly unreasonable or otherwise perverse. 10. Mr. Khaitan, learned Senior Counsel appearing for the appellant submitted that the appointment was made to Saumya Meattle after assessing his academic achievement with the intention sponsoring his overseas education on the understanding that the trainee would serve the appellant company for a minimum period of seven years. The Board resolutions to that effect were passed by the appellant company and the trainee and his surety executed necessary bonds. He assailed the finding of the learned tribunal on the ground that the minority of Saumya Meattle at the time of his appointment was not material inasmuch as he subsequently ratified the surety executed by him upon attaining majority and that a contract executed by a minor is good against the whole world and the minor if he wishes to have the same annulled has to take recourse to appropriate proceeding. 11. In support of his contention he relied on a decision reported in Dhurandhar Prasad Singh v. Jai Prakash University MANU/SC/0381/2001 : AIR 2001 SC 2552. That apart, he submitted that under Section 68 of the Indian Contract Act, 1972 the appellant was entitled to be reimbursed from the property of the minor inasmuch as "necessaries" within the meaning of the said section included educational expenses. Recourse could also be taken against the surety in terms of the section 120 of the Contract Act. 12. Mr. Khaitan further challenged the finding of the tribunal that the sponsorship was colourable in nature. He strongly disputed the finding of the tribunal that such expenditure was personal expenditure in the guise of "staff welfare expenses". He submitted that such finding was wholly perverse as the trainee had no relation with any of the directors of the appellant company. He however admitted that the mother of the trainee was a partner in a firm in which the company was also a partner and that in respect of the assessment year 1996-97 relating to I.T.A. No. 265 of 2003 a relative of the trainee held substantial shares in the appellant company. 13. He further submitted that the findings of the tribunal were based on mere surmise and the expenses incurred by the company for overseas educational foreign travel were clearly deductible in terms of Section 37(1) of the Incometax Act. 14. Mr. Khaitan relied on a unreported decision of this Court in I.T.A. No, 249 of 2005 (M/s. Gour Nitya Tea Industries Ltd. v. CIT) delivered on 24th June, 2010 in support of his contention that since there are materials on record that the appellant had served the company after returning from abroad it cannot be said that the expenditure undertaken by the company was colourable and not wholly and exclusively for the purpose of its business. 15. Mr. Khaitan also submitted certain additional documents to bolster his contention that the appellant had in fact been in the service of the company till 31st March, 2009 and salaries had been duly paid to him. 16. Mr. Som, learned senior advocate appearing for the revenue in I.T.A. No. 265 of 2003 hotly contested the submissions of Mr. Khaitan. He submitted that the letter of appointment of Saumya Meattle on 28.05.1990 was void inasmuch as he was a minor at that time. In support of his contention he relied on decisions reported in AIR 1941 Bom 215 (Sic), 32 ITR 550 (Sic), Ram Nagina Singh Pltf v. Governor General in Council Deft. MANU/WB/0022/1952 : AIR 1952 Cal 306 and Hari Satya Banerjee v. Mahadev Banerjee MANU/WB/0020/1983 : AIR 1983 Cal 76.
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17. He further submitted that the action of the company to sponsor the aforesaid trainee was clearly a colourable one and is device to keep aside a portion of income from the purview of tax liability inasmuch as the decision to sponsor his overseas education was taken within a couple of days of his joining as a trainee and that there was no exceptional circumstance to justify the same, particularly, bearing in fact that the company had not undertaken such sponsorship in respect of any employee either in the past or thereafter. 18. He further submitted that Saumya Meattle had already been selected for the overseas course prior to his appointment on 28.05.1990 which is evident from the date of his application for release of foreign exchange i.e. 23.04.1990. He submitted that additional documents submitted before this Court should not be taken into consideration inasmuch as the same have not been admitted in terms of order 41 rule 27 of the Civil Procedure Code. 19. Learned Counsel further submitted that the decision in the case of Gour Nitya Tea Industries (supra) is clearly distinguishable from the facts of the instant case. 20. Learned counsel appearing in I.T.A. No. 98 of 2003 adopted the submission of Mr. Som and further submitted that the decision in Sasoon J. David & Co. (P.) Ltd v. CIT MANU/SC/0334/1979 : [1979] 118 ITR 261/1 Taxman 485 (SC) is clearly distinguishable in the facts of the instant case. 21. In view of the aforesaid submissions of the parties one requires to test whether the finding of the tribunal that the sponsorship for overseas studies and the travel expenses undertaken by the company was colourable or not or in other words was such expenditure wholly and exclusively for the business of the company or the same was merely the designed for ulterior purpose. 22. It is true that the letter of appointment of the trainee was issued at a time when he was a minor. However, it must be borne in mind that subsequently the minor on attaining majority had ratified of such contract and also his liabilities arising therefrom. The judgments cited by Mr. Som in this regard are clearly distinguishable on facts as in none of the cited cases the minor on attaining majority had ratified his liabilities arising from such contract. On the other hand, in the case reported in Dhurandhar Prasad Singh such a contract is held to be good against the whole world. 23. In view of such fact it may not be correct to hold that there was no binding contract between the company and the trainee in the instant case. However, a more relevant issue in the matter is whether the act of the company in sponsoring such a minor trainee within a couple of days of his appointment for pursuing the studies in Computer Science, without assessing his competence and capability, can be construed to be a bona fide act on its part or a colourable devise for ulterior purposes. The Tax Authorities below have rightly come to conclusion on facts that the appellant company without assessing the competence of the trainee and within a couple of days from his joining sponsored him for pursuing study in software development - an area which was unconnected with the business activity of the company at the time when such decision was taken. 24. It is an admitted position that the principal business of the company was manufacturing and supplying of packets/pouches to oil manufactures for filling and packaging their products. It was only in the assessment year 199293 the company made necessary amendments in its memorandum to enable it to enter the business of computer operation and data processing while the decision to send the trainee abroad for computer education was in 04.06.1990. 25. Therefore, it cannot be said that the sponsoring of the trainee for overseas computer education was for the business of the company at the time when such decision was taken on 04.06.1990. Furthermore, the trainee had already secured admission for such course in the foreign University and applied for release of foreign exchange with regard thereto five weeks prior to his appointment. Hence, the finding of the tribunal that the sponsorship of the trainee was colourable in nature and not for the purpose of business of the company his wholly justified and borne out from the materials on record. 26. We, however, do not agree with the tribunal that the trainee was a relation of one of the directors of the company but that is neither here nor there inasmuch as the purpose for which the trainee was being sent abroad, namely,
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computer education was admittedly not one of the businesses in which the company was indulging in at the time when the board resolution was taken to sponsor his foreign education. 27. Subsequently, whether the company was marginally engaged in the business of computer software development or that after his foreign sojourn the trainee worked for some period in the appellant company does not change the attending circumstance that at the time when the board took resolution to sponsor his overseas education of the trainee on 04.06.1990. The Company had no business expediency so as to treat the same as being business expenditure. 28. In this regard, it has been rightly argued on behalf of the revenue that the ratio in the case of Gour Nitya Tea Industries Ltd v. CIT is clearly distinguishable on facts. In that case, the appellant had been sent abroad after working as a trainee for more than nine months in the assessee company and the purpose of overseas education was in an area which the principal business of the assessee company. The said facts are significantly absent in the instant case to justify the deduction claimed by the appellant company under section 37(1) of the Income-tax Act. 29. The ratio of the case reported in Sasoon J. David & Co. (P.) Ltd (supra) is not applicable in the facts of the instant case since the business of the company which is principally in the area of manufacturing and marketing of plastic pouches cannot justify the sponsoring of the trainee for overseas education in computer software development and accounting. Even for accounting purpose of the company no employee is required to be sent at road. It must be borne in mind that this was also not a regular practice of the company, inasmuch as no one before or thereafter had been selected by the company for such preferential treatment in the matter of obtaining overseas education. 30. For the aforesaid reasons, we find that the findings of the tribunal in this regard are wholly justified and do not require interference. The question No. I in I.T.A. No. 98 of 2003 and I.T.A. No. 265 of 2003 is therefore answered in the negative in favour of the revenue and against the appellant. 31. The question No. II in I.T.A. No. 98 of 2003 and the sole question of I.T.A. No. 99 of 2003 are taken up for consideration simultaneously. The issue involved herein is whether the confirmation of disallowance with regard to commission paid by the company to M/s. Telecom Ancillaries Pvt. Ltd. to the tune of Rs. 1,66,6660 in assessment year 1991-92 (in I.T.A. No. 98 of 2003) for providing expertise to apply for tender and follow up action for acceptance of tender and a sum of Rs. 12,00,000/- to the said M/s. Telecom Ancillaries for the assessment year 1992-93 (in I.T.A. No. 99 of 2003) for restraining the latter from participating in the tender and for taking follow up action for acceptance of the tender in favour of the appellant company was justified or not. 32. Mr. Khaitan appearing for the appellant company argued that the finding of the tribunal that the said agreements were entered into at the end of the financial year was perverse and that the disallowance was confirmed on the basis of irrelevant considerations. He emphasized that this was a standard practice which was adopted by the company in earlier and subsequent years and that due to the arrangement of non-participation of M/s. Telecom Ancillaries in the tender the appellant company earned substantial profit in the subsequent years. He further relied on the decision reported in SA Builders Ltd. v. CIT MANU/SC/8798/2006 : [2007] 288 ITR 1/157 Taxman 74 (SC) that if the expenses are incurred as a measure of commercial expediency, the revenue cannot put itself in the armchair of the businessman and decide the reasonableness of such expenditure. 33. The learned counsel appearing for the revenue resisted such contention on the ground that the findings of the tribunal were wholly justified. It was submitted that the purpose for entering such agreement with M/s. Telecom Ancillaries Pvt. Ltd. in the matter of providing expertise for applying for tender and follow up action for obtaining the same were woefully vague and were wholly impermissible in the matter of public tender floated by Public Sector Companies. It was his submission that in the event the gist of the agreement appeared to be one which was impermissible in the factual backdrop of the transaction, the question of commercial expediency did not arise. 34. It is true that the agreement between M/s. Telecom Ancillaries Pvt. Ltd. and the appellant company was executed on 25.01.1992 (in the assessment year 1992-93) instead of 25.03.1992 as wrongly recorded by the tribunal in paragraph 11 of its order in I.T.A. No. 99 of 2003. However, bearing in mind the nature of the contract namely providing expertise in preparation and procurement of tender in favour the appellant company with regard to tender floated by Public Sector organization we have no doubt in our mind that scope and ambit of payment of such
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commission transcended the lawful or permissible limits of participation in such tender. Furthermore, the tribunal has rightly held that the nature of such expertise in preparation of tender documents and follow up action for obtaining such tender has not been clearly spelt out. When the commission payments had been made in for purposes which are prima facie impermissible in law the question of permitting such expenses on the anvil of commercial expediency does not arise at all. The decision in S.A. Builders Ltd.'s case (supra) is not of any assistance to the appellant as it did not relate to legally impermissible expenditure as in the instant case. 35. The issue of payment of 12 lakh inter alia, for ensuring non-participation of M/s. Telecom Ancillaries Pvt. Ltd. in the tender and also for follow up action to procure such tender in favour of the opposite party also smacks of creating a cartel in the matter of public tender which equally impermissible in law. Furthermore, the finding of the tribunal that such agreement does not shut out other companies from contesting the tender also a justifiable ground for such disallowance. 36. We, therefore, hold that the findings of the tribunal are clearly justified and the confirmation of the aforesaid disallowance is justly warranted in law. The question No. II in I.T.A. No. 98 of 2003 and the sole question in I.T.A. No. 99 of 2003 is accordingly answered in the negative in favour of the revenue and against the appellant. 37. Question No. III in I.T.A. No. 98 of 2003 relates to the confirmation of disallowance of short term capital loss to the tune of Rs. 4,17,550/- suffered by the appellant company in the purchase and sale of shares of M/s. Reliance Industries Ltd. and M/s. ITC Ltd. for the assessment year 1991-92. 38. Mr. Khaitan has argued that the tribunal after holding that the appellant company is not in the business of purchase and sale of shares ought not to have disallowed such short term capital loss on the ground that the same are speculation losses as provided in the Explanation to section 73. Learned counsel appearing for the revenue opposed such submission. He submitted that the appellant company need not be primarily into the business of purchase and sale of shares and even if a few transaction of that nature are evident the loss suffered in such transactions shall be construed to be speculation loss by the deeming provision contained in the Explanation to section 73 of the Incometax Act. 39. This issue therefore calls for an interpretation of the Explanation to Section 73 of the Income-tax Act. Explanation to Section 73 of the Income-tax Act is read as follows :
Losses in speculation business. Explanation : Where any part of the business of a company other than a company whose gross total income consists mainly of income which is chargeable under the heads "Interest on securities", "Income from house property", "Capital gains" and "Income from other sources", or a company the principal business of which is the business of banking or the granting of loans and advances) consists in the purchase and sale of shares of other companies, such company shall, for the purposes of this section, be deemed to be carrying on a speculation business to the extent to which the business consists of the purchase and sale of such shares.
40. A plain reading of the aforesaid provision of law would show that if a part of the business of the company consisted of purchase and sale of shares of other companies, the said company would be deemed to be in speculation business and loss suffered by such company in such activity, i.e. purchase and sale of shares, would be deemed to be speculation loss and would not be deductible from the profits and losses of the said company in respect of other businesses. Hence, the condition precedent for attracting the said provision is that a part of the business of the company must relate to purchase and sale of shares. 41. Indisputably CIT (Appeals) as well as the tribunal had come factually to a conclusion that the appellant company was not involved in the business of sale and purchase of shares. Merely indulging in purchase and sale of shares for investment is not business activity in sale and purchase of share of other companies for the purpose of this section. 42. In view of such fact, precondition necessary for attracting the Explanation to section 73 is absent in the instant case and the disallowance of this loss treating the same being speculation one is wholly unwarranted.
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43. Furthermore, the conduct of the company in selling the shares in questions soon after taking delivery of the shares when it is found that the value of such shares were rapidly decreasing cannot be said to be unjustified or imprudent. The reasoning of CIT (Appeals) that there was no pressing need for the appellant company to sell the shares on 18.12.1990 within a short span of time of its acquisition was clearly perverse in the admitted facts of the instant case. 44. The confirmation of the disallowance of such short term capital loss suffered by the company in the assessment year 1991-92 as speculation loss is illegal and therefore set aside- Question No. III in I.T.A. No, 98 of 2003 is accordingly answered in affirmative in favour of the assessee and against the revenue. I.T.A. No. 98 of 2003 is allowed in part, as aforesaid. I.T.A. No. 99 of 2003 and I.T.A. No. 265 of 2003 are dismissed. The interim order, if any, stands vacated. The Assessing Officer is directed to recompute the total income and the tax payable by the appellant company in respect of the assessment year 1991-92 in terms of the findings in the instant judgment and order. Manupatra Information Solutions Pvt. Ltd.
MANU/TN/0116/1918 Equivalent Citation: (1919)ILR 42Mad185, 1919-19-LW229, 1919-9-LW229, (1919)36MLJ29 IN THE HIGH COURT OF MADRAS FULL BENCH Decided On: 14.11.1918 Appellants: Batchu Ramajogayya Vs. Respondent: Vajjula Jagannadham and Anr. Subject: Contract Catch Words Mentioned IN Case Note: Contract - Grant for money - Suit for money decreed by lower court - Held, in present case, man was liable in old personal actions of debt covenant trespass was said to be personally liable and still so described after abolition of these old forms of action and of liability to arrest in execution should be that decree cannot be passed against minor or his estate on covenant entered into on his behalf by guardian for his benefit. JUDGMENT John Wallis, C.J. 1. The decision of the Privy Council in Waghela Rajsanji v. Shekh Masludin I.L.R. (1887) Bom. 551 with reference to a personal covenant made on behalf of a Hindu minor by his guardian, that a guardian cannot be allowed to make covenants in the name of the ward so as to impose personal liability upon him, precludes us, in my opinion, from holding that a guardian has any such power in India. It was, however, pointed out in Maharana Shri Ranmalsingji v. Vadilal Vakhatchand I.L.R. (1894) Bom. 61 that this ruling does not affect the liability of the minor's estate under Section 68 of the Indian Contract Act to persons who have supplied him during minority with necessaries suited to his condition in life. What are necessaries must depend on the facts of each case, and in the case of a Hindu, money advanced for the expenses of a marriage which the minor has to perform or to pay off a debt binding upon him, may
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be recoverable under this head from his estate. It was held in this case that a guardian has no power to acknowledge debts on behalf of the minor, but this part of the decision was overruled by a Full Bench in Annappagauda v. Sangadigyappa I.L.R. (1901) Bom. 221 where Sir Lawrence Jenkins, C. J., pointed out that the fact that a guardian cannot impose a personal liability on his ward by contract does not prevent him from binding the ward by acknowledgments under Section 19 of the Limitation Act: "for an acknowledgment under the Act is fundamentally different from a fresh contract, though it may in some respects have similar results." Further, where a guardian himself borrows money for the necessities of the minor in such circumstances as to give him a right to reimbursement from the minor's estate, his creditor may in a proper case be subrogated to his rights as held in Sanka Kriehnamurthi v. The Bank of Burma I.L.R. (1911) Mad. 692. In practically all the cases in this Court which are referred to in the order of reference or were cited before us, it will be found that the minor's estate could have been made liable under one of the first two heads independently of any contract by the guardian on his behalf. No practical inconvenience, therefore, would result from giving full effect to their Lordship's express decision, but, even if it were otherwise, we should be bound to follow it. That this rule is well settled appears to me to be assumed by the Privy Council in Indur Chunder Singh v. Radha Kishore Ghose I.L.R. (1892) Cal. 507. I do not read the recent judgment in Imambandi v. Mutsaddi (1917) L.R. 45 IndAp 73 : 35 M.L.J. 422 as holding that a Mahomedan guardian can bind a minor's estate by contract except in the sense that the minor's estate will be liable for necessaries supplied by his agency, and that he can sell the minor's property in proper cases. The question under consideration in that case was the right of a de facto guardian to alienate the minor's property. 2. It was also argued that the decision in Waghela Rajsanji v. Shekh Masludin I.L.R. (1887) B. 551 only established the illegality of covenants' imposing personal liability on the ward in the sense of making him liable to arrest after attaining majority in execution of a decree obtained against him on such covenants. This contention is clearly untenable. 3. The High Court had passed a decree against the appellant, who was sued after attaining majority on a covenant made during his minority by his guardian, for Rs. 12,000 with interest to be recovered from the defendant's property generally as well as from him personally. The contention raised on appeal was that the covenant was not binding on him at all, and their Lordships upheld this contention and dismissed the suit altogether. Further the term personally ' liable is well understood in English Law, and has reference to the old classification of actions into personal, real and mixed. "Actions may be personal, as contradistinguished from real and mixed; the first being actions against the person only for damages, the second for recovery of real estate, the third for both." A.G. v. Lord Churchill (1841) 8 M. & W. 171 : 151 E.R. 997. A man who was liable in the old personal actions of debt, covenant, trespass, etc., was said to be personally liable and is still so described after the abolition of these old forms of action and of the liability to arrest in execution. I think the answer should be that a decree cannot be passed against a minor or his estate on a covenant entered into on his behalf by a guardian for his benefit. Ayling, J. 4. I would prefer to frame our answer as suggested by my learned brother Seshagiri Aiyar, J., in his judgment about to be delivered. Seshagiri Aiyar, J. 5. It was tacitly agreed that the decision in Indur Chunder Singh v. Radha Kishore Ghose I.L.R. (1891) Cal. 507 to which reference is made in the order of the Division Bench has no bearing on the question we have to decide. That was a case of a personal and onerous executory contract by the widows in management which was held not to bind the minor heir. The question before us is what is the principle laid down in Waghela Rajsanji v. Shekh Masludin I.L.R. (1887) Bom. 551 and what are its limits. There are some accepted propositions: (a) A guardian can for a proper purpose, by apt words, create a charge over the property under his management so as to bind the minor. See Dowse v. Gorton (1891) A.C. 190 : (b) If the guardian acts for the minor and borrows and if the creditor obtains a decree for the loan against the guardian, the latter can sue the minor for reimbursement: This is based on the principle of subrogation and may shortly be styled the theory of indirect recourse. Strickland v. Symons (1884) 26 Ch. D. 245 In re Johnson: Shearman v. Robinson (1880) 15 Ch. D. 548; Farhall v. Farhall (1871) 7 Ch. 7 A. 128 and Sanka Krishnamurthi v. The Bank of Burma I.L.R. (1911) Mad. 692 : (c) For necessaries, the debts contracted by the
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minor himself or by his guardian would bind the estate : Section 68 of the Contract Act and Maharana Shri Ranmalsingji v. Vadilal Vakhatchand I.L.R. (1894) Bom. 61 : (d) If the guardian in management gives a bond in renewal of a debt binding on the minor, the estate could be proceeded against, as the act of the guardian may be regarded as keeping alive by acknowledgment a pre-existing liability : per Jenkins, C.J., in Annappagauda v. Sangadigyapa I.L.R. (1901) Bom. 221 6. It is possible that the cases which are said in the Order of Reference to conflict with waghela Rajsanji v. Shekh Masludin I.L.R. (1887) Bom. 551 may be brought under one or the other of the above categories. That is the view taken by my Lord and that is certainly one way of reconciling the Privy Council decision with the mass of cases which have been decided since that ruling. 7. However, I shall shortly point out that the decisions in Madras and in the other presidencies can be based on a broader ground. I do not wish to take a narrow view of Waghela Rajsanji v. Shekh Masludin I.L.R. (1887) B. 551. Mr. Justice Woodroffe in Mir Sarwarajan v. Fakharuddin Mahomed Chowdhry I.L.R. (1906) C. 168 states that what the Judicial Committee intended to lay down was that an onerous covenant cannot be imposed by the guardian upon the person or property of the minor. That is also my view. Although this decision was overruled by the Judicial Committee in Mir Sarwarajan v. Fakharuddin Mahomed Chowdhry I.L.R. (1911) C. 232 on another point, I do not think this View of the law was taken exception to in the argument before or in the judgment of the Privy Council. The various English decisions dealing with trustees and executors to which our attention was drawn in the course of the argument lay down that a trustee or executor has no power to bind the beneficiary by personal contracts--In re Johnson Shearman v. Robinson (1880) 15 Ch. D. 548 and In re Evans : Evans v. Evans (1887) 34 Ch. D. 597. I do not think the bona fides of the guardian is an element for consideration. But where an infant's estate would be liable but for the interposition of the guardian, I fail to see why the latter undertaking that liability should not bind the estate. After examining Waghela Rajsanji v. Shekh Masludin I.L.R. (1887) B. 551 once again, I do not think their Lordships intended to lay down that under no circumstances can a minor be held liable for the acts of his guardian. Almost all the High Courts have, since Waghela Rajsanji v. Shekh Masludin I.L.R. (1887) B. 551 held that the liability of the minor under the Hindu Law is not affected by the fact that the guardian has incurred that obligation. Nathuram v. Shoma Chhagan I.L.R. (1890) B 562 Maharana Shri Ranmalsinghji v. Vadilal Vakhatchand I.L.R. (1894) B 61 Siva Narayan Ghosh v. Kamakhya Ghose (1918) 28 Indian Cases 877 (Cal.) Sunaararaja Ayyangar v. Pattanathuswami Tevar I.L.R. (1894) M. 306 Sinaya Pillai v. Munisami Ayyan I.L.R. (1899) M. 289 Subramania Aiyar v. Arumuga Chetti I.L.R. (1902) M. 330 Srimath Daivasikamani Pandarasannadhi v. Noor Mahomed Routhan I.L.R. (1907) M. 47 Duraisami Reddi v. Muthial Reddi I.L.R. (1908) M. 458 Krishna Chettiar v. Nagamani Ammal I.L.R. (1915) M. 915 and Venkitasamy Naicker v. Muthusamy Pillai (1917) 34 M.L.J. 177 have all taken this view. Sarjeant, C.J., Telang, J., Mookerjee, J. and Muthuswami Aiyar, J. are among the Judges who have enunciated this view. 8. If we examine some of the Privy Council decisions before, contemporaneous with, and after, Waghela Rajsanji v. Shekh Masludin I.L.R. (1887) Bom. 551 it will be seen that the Judicial Committee did not intend to lay down that under no circumstances can the guardian bind the estate of the ward, except it be by creating a charge. In 6 Moore's Indian Appeals 393, the well known case of Hanuman Prasad, their Lordships speak of a guardian borrowing on behalf of a minor and charging his estate in the same sentence. In Watson and Company v. Sham Lal Mitter I.L.R. (1880) Cal 381 which is contemporaneous with Waghela Rajsanji v. Shekh Masludin I.L.R. (1887) Bom. 551 an agreement by a guardian to pay enchanced rent was held binding on the minor. In Imambandi v. Mutsaddi (1918) 45 I.A. 73 the Right Honourable Mr. Ameer Ali lays down that a Mahomedan guardian can bind a minor's estate by contracts entered into for the Iatter's benefit. So the rule of law in Waghela Rajsanji v. Shekh Masludin I.L.R. (1887) Bom. 551 is subject to exceptions. Strong reliance was placed on the observation of Lord Hobhouse at page 561: "Now it was most candidly stated by Mr. Mayne, who argued the case on behalf of the respondent, that there is not in Indian Law any rule which gives a guardian and manager greater power to bind the infant ward by a personal covenant than exists in English Law". I do not think that it was intended to lay down by this statement that no rule to the contrary under the Hindu Law would be countenanced. The term Indian Law was meant to apply to the statute law of the land and not to Hindu or Mahomedan Law, I am therefore of opinion that the rule laid down in Waghela Rajsanji v. Shekh Masludin I.L.R. (1887) Bom. 551 was not intended to affect the Hindu Law liability of the minor. In this view, the decisions which are mentioned in the order of reference are not inconsistent with Waghela, Rajsanji v. Shekh Masludin I.L.R. (1887) Bom. 551.
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9. I would therefore answer the question under reference by saying that no decree should be passed against a minor or his estate on a contract entered into on his behalf by a guardian, under which covenant no charge is created on the estate except in cases in which the minor's estate would have been liable for the obligation incurred by the guardian under the personal Jaw to which he is subject. Although the answer given by the learned Chief Justice read with his opinion would cover my opinion also, I respectfully think that in order that doubts may not be entertained as to our meaning, the answer should be in the form I have suggested. Manupatra Information Solutions Pvt. Ltd.
MANU/AP/0406/1955 Equivalent Citation: IN THE HIGH COURT OF ANDHRA PRADESH FULL BENCH Appeal No. 666 of 1950 Decided On: 11.07.1955 Appellants: Vadakattu Suryaprakasam Vs. Respondent: Ake Gangaraju and others Hon'ble Judges/Coram: Subba Rao, C.J., Viswanatha Sastry and Bhimasankaram, JJ. Counsels: For Appellant/Petitioner/Plaintiff: Advocate General, D. Narasa Raju and K. B. Krishna Murthy For Respondents/Defendant: Messrs. John and Rows and Vepa P. Sarathy, for Nos. 1 to 4 and P. S. Raghava Rama Sastry and Alladi Kuppuswamy for No 5 Subject: Contract Catch Words Mentioned IN Acts/Rules/Orders: Indian Contract Act, 1872 - Section 11, Indian Contract Act, 1872 - Section 68; Transfer Of Property Act, 1882 Section 40, Transfer Of Property Act, 1882 - Section 53-A, Transfer Of Property Act, 1882 - Section 54, Transfer Of Property Act, 1882 - Section 55 ORDER Bhimasankaram, J. 1. This appeal raises the question as to whether an agreement to sell by the guardian of a Hindu minor is specifically enforceable against the minor. Two decisions of the Privy Council have been referred to by the, Learned Counsel as bearing on the point; viz., - 'Mir Sarwarajan v. Fakhruddin Mohammad', 39 Cal 232 (PC) (A) and - 'Subrahmanyam v. Subbarao', MANU/PR/0005/1948 : AIR 1948 PC 95 (B). The earlier case laid down that it was not within the
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competence of the guardian of a minor to bind the minor or his estate by a contract to purchase immovable property and that such a contract was not enforceable by either party for want of mutuality. The principle of this case was applied by a Full Bench of the Madras High Court in - 'Venkatachalam Pillai v. Sethuram Rao', MANU/TN/0156/1932 : AIR 1933 Mad 322 (C) in the case of a Hindu minor seeking to enforce an agreement in his favour for the resale of a property which had been alienated by his guardian and it has been uniformly held in that Court that no decree for specific performance could be passed in favour of or against a minor on the basis of a contract either for sale or purchase of immoveable property entered into on his behalf by his guardian. The other decision of the Privy Council related to the effect of S. 53-A, T. P. Act. There, the guardian of a minor had executed a contract for sale of the minors property and had put the contractee in possession. The question arose as to whether in a suit filed by the minor for possession of the property on the ground that the contract was not binding on him the purchaser could invoke the doctrine of part performance under the section. Their Lordships held that in the case of a contract entered into on behalf of a minor, it would be the minor who would be the 'transferor' within the meaning of S. 53-A though the contract was entered into by his guardian and the vendee could resist the action. Subsequent to the Privy Council decision, Viswanatha Sastry J. has decided in the Madras High Court in - "Ramalingam Reddi v. Babanambal Animal', MANU/TN/0112/1951 : AIR 1951 Mad 431 (D) that so far as an agreement by a guardian to sell a minor's properties is concerned, it would be enforceable specifically against the minor. In - 'Hari Mohan v. Sew Narayan', AIR 1949 Ass 57 (E) a Bench of the Assam High Court took the opposite view. In a Full Bench of the Hyderabad High Court however in - 'Amid Ahmmad v. Meer Nizam Ali'. AIR 1952 Hyd 120 (FB) (F) two learned Judges of the High Court held that a contract to purchase immoveable property entered into on behalf of a minor by a de jure guardian was enforceable against the minor provided it is for his benefit, while the other Judge took the view that though a contract for sale in such circumstances might be enforceable against the minor a contract for purchase would not be. My Lord the Chief Justice sitting as a Judge of the Madras High Court referred this question for determination by a Pull Bench of the Madras High Court but it does not appear that the Madras High Court has dealt with the matter yet. Though as has been recently held by a Full Bench of this Court decisions of the Madras High Court rendered before 5-7-1954 may be binding upon this Court, subsequent decisions will only have a persuasive force. Thus, there is no decision of the Madras High Court subsequent to the Privy Council decision in MANU/PR/0005/1948 : AIR 1948 PC 95 (B) which is binding on us, the decision of Viswanatha Sastry J. being only that of a single Judge. We therefore propose to refer the following question to a Full Bench of this Court.
Whether a contract entered into by a guardian of a Hindu minor for sale or for purchase of immovable property is specifically enforceable against a minor?
OPINION Subba Rao, C.J. 2. The following question has been referred to the Full Bench by a Division Bench of this Court:
Whether a contract entered into by a guardian of a Hindu minor for sale or for purchase of immoveable property is specifically enforceable against the minor?
3. The facts that gave rise to the reference may be briefly stated. The suit tiled house and site in Kakinada belonged to one Akke Subbarao. having been obtained by her under a will dated 15-6-1942 executed by her mother in her favour. She executed two mortgage bonds dated 21-12-1942 and 22-12-1948 in respect of that property in favour of defendant 5 for Rs. 2,000/- and Rs. 4,000/- respectively. On her death, it devolved upon her minor daughters, who are defendants 3 and 4. Defendant 1 is her husband and defendant 2 is her minor son. The tiled house was in ruins and the rent therefrom was insufficient even to defray the interest due under the mortgage.
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In the circumstances, defendant 1 as father and guardian of defendants 2 to 4 agreed to sell the same to the plaintiff under a registered agreement dated 26-4-1949 for a consideration of Rs. 11,500/- out of which Rs. 200/- was paid by the plaintiff as advance. Under the said agreement the plaintiff should discharge the two mortgages in favour of defendant 5 and keep the balance as deposit with him carrying interest and pay the same to defendants 3 and 4 after they attained majority and execute a sale deed within three months from the date of the agreement. Subsequent to this agreement, defendant 1 sold the same to defendant 5 for consideration. The plaintiff alleging that he was ready and willing to perform his part of the contract filed O. S. No. 5 of 1950 on the file of the Court of the Subordinate Judge, Kakinada for specific performance of the aforesaid agreement. To that suit he made the minor son and daughters of Akke Subbarao parties as defendants 2 to 4 and their father as defendant 1. Defendant 5 is the subsequent alienee. 4. The defendants pleaded inter alia that though the agreement ex facie showed consideration of Rs. 11.500 there was concealed portion, of the consideration of Rs. 2.000/- to minimise the expenses of stamp and registration which the plaintiff refused to pay. that the suit agreement was not specifically enforceable against the minors, that the agreement was not beneficial to the minors and that in any view no relief could be asked for against defendant 5. 5. The learned Subordinate Judge held that the agreement was not enforceable against the minors for want of mutuality basing his view on the decision of the Judicial Committee in 39 Cal 232 (PC) (A). He further held that he would be entitled to recover only the sum of Rs. 200/- paid by him as advance to defendant 1. As he held against the plaintiff on the question of enforceability of the contract, he did not give any of his definite findings on the other issues raised in the case. In the result, he dismissed the suit. When the appeal came up before a Division Bench they referred the aforesaid question to the Full Bench in view of the conflict between the decision of the Judicial Committee in 39 Cal 232 (PC) (A) and MANU/PR/0005/1948 : AIR 1948 PC 95 (B). 6. The Learned Counsel for the appellant argued that the decision of the Judicial Committee in 39 Cal 232 (PC) (A), which was the foundation for a long catena of decisions of the various High Courts, is no longer good law in view of the later decision of the Judicial Committee in AIR 1943 PC 95 (B), which, though it did not completely destroy the foundation, had rudely shaken it to such an extent that it could no longer bear the edifice of the case law built on it. 7. The Learned Counsel for respondents contended that the later decision had no such effect but on the other hand the two decisions of the Federal Court in - 'Sriramulu v. Pundarikakshayya', (MANU/FE/0019/1949 : 1950-1 Mad 586: AIR 1949 FC 218) (G). and - 'Bapayya v. Pundrikakshayya', 1950 1 Mad LJ 612: (AIR 1949 FC 213) (G1), had re-inforced the foundation laid by the decision in 'Mir Sarwarajan v. Fakhruddin Mohammad (A)', and accepted and approved the principle underlying the said decision. He further argued that the general and accepted principle based on equity and good conscience is that a guardian cannot enter into a contract imposing a personal obligation on the minor, that the only exceptions engrafted on those rules are those embodied in S. 68, Contract Act and the rule of Hindu law permitting the guardian of a minor to alienate or charge immoveable property for the purpose of necessity or benefit to the estate and that, therefore, a contract to sell is not within the competency of a guardian, whether 'de facto or de jure'. 8. Before attempting to answer the question raised, it is as well that the three currents of judicial thought on distinct but closely allied topics may be pursued up to their confluence in the aforesaid judgments of the Federal Court. They relate to the following three questions :
1. The right of the guardian of a minor to bind his ward personally by a simple contract debt; 2. His right to execute a promissory note on his behalf; and 3. His right to deal with immovable property of the minor.
9. The earliest decision on the question of a guardian's right to borrow money is that of the Judicial Committee in www.manupatrafast.in/PrintEmailDoc/PrintMultipleDoc.aspx?i=0,'129789','129791','129794','129795','129798','129797','129802','129790','129793' 55/79
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'Waghela Rajsanji v. Masludin', 11 Bom 551 (PC) (H). It was expressly ruled therein that a guardian cannot contract in the name of a ward so as to impose on him a personal liability. As a strong reliance is placed on this decision for the respondents, it is necessary to notice it in some detail. There, a widow as the guardian of her infant son, the heir of a talukdari estate, transferred some villages and in the deed of transfer, to which her ward was represented by her as his guardian nominally a party, contracted to idemnify the purchaser in case the Government should claim and enforce a right to revenue upon the villages which she transferred as being rent free. The deed purported to make both guardian and ward personally liable in that respect and also charged the liability upon other parts of the talukdari estate. The Government claimed and enforced payment of revenue upon the villages. A suit was filed by the purchaser for recovery of the rents collected from him against the quondam minor to be recovered personally from him and also out of the rents and profits of talukdari estate. The Judicial Committee held that the miner was not personally liable to pay the same. 10. It would be seen from the aforesaid facts that a covenant to idemnify a purchaser against his loss if the Government recovered rents from him was an onerous covenant and as such could not conceivably have been for necessity or for the benefit of the minor. It was not an obligation which could be supported by the Hindu law doctrine of "necessity or benefit to the estate". Before the Judicial Committee Mr. Mayne who argued the case on behalf of the respondents conceded that there was not in Indian law any rule which gave a guardian and manager greater power to bind the infant ward by a personal covenant than existed in English law. The Judicial Committee therefore pointed out that the matter must be decided on equity and good conscience, generally interpreted to mean the rules of English law. In that view they observed at p. 561 as follows :
Their Lordships are not aware of any law in which the guardian has such a power, nor do they see why it should be so in India. They conceive that it would be a very improper thing to allow the guardian to make covenants in the name of this ward so as to impose a personal liability upon the ward and they hold that in this case the guardian exceeded her powers so far as she purported to bind her ward and that, so far as this suit is founded on the personal liability of the talukdar, it must fail.
It is very difficult to accept the argument that this decision is an authority for the position that a contract entered into by a guardian on behalf of a minor is unenforceable against the minor even if that contract came within the doctrine of "necessity or benefit" to the estate under Hindu law. Mr. Mayne, the author of Hindu Law rightly did not rely upon the doctrine of necessity as in that case the onerous covenant of indemnity could not be brought within its scope. This case is only an authority for the simple proposition that a guardian cannot enter into a contract imposing an onerous obligation on a minor in a case not covered by Hindu Law. 11. Nor does the decision of the Judicial Committee in - Indur Chunder Singh v. Radhakishore Ghose', 19 Cal 507 (PC) (I), really support the extreme contention of the respondents. There, a person died possessing a leasehold interest in a particular land. On his death his mother and widow were in management of that land. Subsequently, a son was adopted to him by the widow. The lease having expired a renewal for five years was taken by the managers but was surrendered before that period elapsed during the minority of the son against whom on his attaining full age, this suit was brought by the lessor to recover three years' rent under the lease deed. The Judicial Committee held the contract of the adoptive mother and guardian was not personally binding upon the adopted son. But a careful scrutiny of the judgment discloses that the lease deed was not executed by the managers as guardians of the minor. The lessees described themselves respectively as "mother of the late Gopi Mohun Ghose" "mother of the minor adopted son" and they bound themselves to pay the rents reserved and to pay interest on any arrears. At page 511 their Lordships observed :
The contention that the mother and widow of Gopi Mohun Ghose had power to bind the minor by contract was abandoned in the Court below and their Lordships are of opinion that such a contention could not be sustained.
At page 513 they made the position clearer when they observed :
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It may be that as between them and the infant, they might be able, in some circumstances, to show that the estate ought to bear the burden they had taken upon themselves but that is not the question raised in this case, in which the plaintiffs seek to establish a direct relation between themselves and the estate of the infant and a liability on the part of the infant now that he is of age and of his estate, to fulfil the obligations entered into by the lessees in their own name.
12. It is, therefore obvious from the aforesaid facts and observations that the lease was not executed by the managers as guardians of the minor and therefore no question of enforceability of the personal obligation against the minors could arise in that case. 13. The said two decisions of the Judicial Committee were considered by a Full Bench of the Madras High Court in 'Patchu. Ramajogayya v. Vajjula Jagannadham', AIR 1919 Mad 641 (FB) (J). There, the Full Bench ruled that on a contract entered into on behalf of a minor by his guardian under which the guardian borrowed money but no charge was created on the miner's estate, no decree could be passed against the minor on his attaining majority or against his estate, except in cases in which the minor's estate would have been liable for the obligation incurred by the guardian under the personal law to which he was subject and that a decree can be passed against the estate of a Hindu minor for a debt contracted by his guardian for the marriage of his sister. Seshagiri Ayyar J. dealing with the case of the Judicial Committee in 11 Bom 551 (PC) (H), observed at page 644:
Woodroffe J. in 'Mir Sarwarajan v. Fakhruddin Mahomed (A)', states that what the Judicial Committee intended to lay down was that an onerous covenant cannot be imposed by the guardian upon the person or property of the minor. That is also my view.
At page 645 the learned Judge proceeded to state, in explaining the observations of Lord Hobhouse in 11 Bom 551 (PC) (H), extracted supra, as follows :
I do not think that it was intended to lay down by this statement that no rule to the contrary under the Hindu law would be countenanced. The term Indian law was meant to apply to the statute law of the land and not to Hindu or Muhammadan Law. I am therefore of opinion that the rule laid down in 11 Bom 551 (PC) (H), was not intended to affect the Hindu Law liability of the minor....I would therefore answer the question under reference by saying that no decree should be passed against the minor or his estate on a contract entered into on his behalf by a guardian under which covenant no charge is" created on the estate except in cases in which the minor's estate would have been liable for the obligation incurred by the guardian under the personal law to which he is subject.
This is an authoritative decision of a Full Bench of the Madras High Court explaining the scope of the observations of the Judicial Committee in 11 Bom 551 (PC) (H), and excluding from its scope contracts covered by domain of the personal law of minors. This view was accepted and followed in Madras without any dissent. In - Satyanarayana v. Mallayya', MANU/TN/0125/1934 : AIR 1935 Mad 447 (FB) (K), it as held that a liability to which a minor would be subject under Hindu law does not become any the less a liability because it is incurred by his guardian. In - 'Zeebunnissa Begum v. Mrs. H. B. Danagher', AIR 1936 Mad 554 (L), it was pointed out that where a contract has been entered into by a guardian for a purpose binding on the minor's estate, there is no question of capacity and that its binding nature depends on the personal law of the parties, in - 'Chockalingam Chettiar v. Muthukarappan Chettiar', MANU/TN/0303/1938 : AIR 1938 Mad 849 (M). on the same principle, a contract of partnership entered into by a guardian was held to be valid. 14. Leach C. J. and Krishnaswami, Ayyangar J. reviewed the case law on the subject in -'Annamalai Chetty, joint firm, Palni v. Muthuswami', MANU/TN/0044/1939 : AIR 1939 Mad 538 (N) and re-stated the legal position laid down by the Full Bench. Krishnaswamy Ayyangar J. who delivered the judgment on behalf of the Bench at pp. 541542 summarised the legal position thus :
In the face of such overwhelming authority which clearly binds us, only one conclusion is possible namely that - 'Hunoomanpershad Pandey v. Mt. Babooee Mundraj Koonwari', 6 Moo Ind App 393 (PC) (O). contains the true test for deciding the binding character even of a simple loan. We may also perhaps add that justice and equity regarded both from the point of view of the minor and the lender, are in
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consonance with the view which has all along been accepted in this Court.
15. When a distinction was sought to be made between a sale or a mortgage and a simple loan on the basis that the former affected only that portion of the miner's estate which was involved in the particular transaction, whereas a simple loan might endanger the entire estate by reason of the possibility of limitless expansion by way of accumulating interest, the learned Judge repelled that contention with the following observations:
Even if this is a sound proposition which we doubt there is no reason why it should not equally apply to other limited owners whose position is analogous to that of the guardian. Such is not however the case. The evil, if any, is due not to the honest creditor who lends the money but to the irresponsible guardian who negligently omits to take prompt steps to repay it. In this connection it is not to be forgotten that the creditor has to make out also for the rate of interest charged.
16. The learned Judge also explained the scope of the personal liability of the minor under Hindu law at page 542 as follows :
It is scarcely necessary to acid that the liability of the estate, though personal in the English law sense of the word, is not personal in the sense that the person of the minor even after majority can be arrested in execution. A personal liability arising out of the contract of the guardian is a liability of minor's estate only.
17. If I may say so, the learned Judge brought out in bold relief the limited scope of the decision of the Judicial Committee in 11 Bom 551 (PC) (H), and saved the doctrine of Hindu Law from extinction. With great respect to the learned Judge, I entirely agree with the views he expressed on the different, aspects of the question raised. 18. The same view was expressed in - 'Sudarsana Rao v. Dalayya'. MANU/TN/0033/1943 : AIR 1943 Mad 487 (P), where a contract entered into by a guardian on behalf of a minor to pay maintenance was upheld. The Nagpur High Court followed the Madras view. See - 'Pandurang Vithoba v. Pandurang Ramchandra', MANU/NA/0086/1946 : AIR 1947 Nag 178 (Q). But the Bombay and Calcutta High Courts took the contrary view and held that the guardian of a minor cannot bind his ward personally by a simple contract debt by a covenant or by any promise to pay money or damages. See - 'Bhawal Sahu v. Baijanath Pertab Narain Singh'. 35 Cal 320 (R); - 'Maharana Shri Ranmalsingji v. Vadilal Vakatchand', 20 Bom 61 (S). The Madras view appears to be more in consonance with the doctrine of Hindu law and is a successful attempt to reconcile the principles of the English law of contracts transplanted in India with the well established doctrines of Hindu Law, whereas the other High Courts, if I may say so with respect are guided only by the principles of English law without due regard to the conditions prevailing in India. 19. Pausing here for a moment let me restate the principles. A minor has no legal competency to enter into a contract or authorise another to do so on his behalf. A guardian therefore steps in to supplement the minor's defective capacity. Capacity is the creation of law whereas authority is derived from the act of parties. The limit and extent of his capacity are conditioned by Hindu law. He can only function within the doctrine of legal necessity or benefit. The validity of the transaction is judged with reference to the scope of his power to enter into a contract on behalf of the minor. Even the the personal liability arising out of the guardian's contract is the liability of the minor's estate only. 20. I shall now proceed to consider the competency of a guardian to execute a promissory note for purposes binding on the estate. In - 'Subramania Ayyar v. Arumuga Chetti', 26 Mad 330 (T), the Madras High Court held that the minor's estate was liable on a promissory note, executed by the mother to raise money for discharging the minor's share of a prior family debt contracted by the uncle and manager. In - 'Krishna Chettiar v. Nagamani Ammal', MANU/TN/0155/1915 : AIR 1916 Mad 677 (U) the liability of the minor's estate to a debt evidenced by a promissory note executed for the benefit of or for the necessity of the minor's estate was recognised. 'Meenakshisundaram Chetty v. Ranga Ayyangar', MANU/TN/0238/1931 : AIR 1932 Mad 696 (V), is another illustration where a decree against an estate was rendered on a promissory note. A Full Bench of the Madras High Court in MANU/TN/0125/1934 : AIR 1935 Mad 447 (FB) (K), re-affirmed the principle that the minor's estate is liable to be proceeded against on a promissory note executed by a guardian on his behalf for a debt binding on the
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estate. 21. It has also been recognised that unless the guardian executed a promissory note on behalf of the minor, it cannot be enforced against the minor's estate, though in some cases it was held that the debt for which the promissory note was executed may afford a distinct cause of action to the creditor for enforcing the debt against the estate. To ascertain whether the guardian executed the promissory note on behalf of the minor, Courts' have looked at the whole instrument and also the surrounding circumstances to find out the intention of the guardian. But a Full Bench of the Madras High Court in -'Sivagurunatha v. Padmavathi', MANU/TN/0338/1940 : AIR 1941 Mad 417 (FB) (W) held that the surrounding circumstances cannot be looked into except such as those disclosed on the instrument itself. It is also true as in the case of simple debts that some of the other High Courts have taken a different view. 22. From the aforesaid decisions, the law relating to the enforcement of promissory notes executed by a guardian on behalf of a minor against the estate of the minor as laid down by the Madras High Court may be stated thus : The Court can look into the entire promissory note to ascertain the fact whether the promissory note was executed by the guardian in his personal capacity or as guardian of his ward. If the promissory note was executed on behalf of the minor for purposes binding on the estate, it could be enforced against the estate. Even in regard to promissory notes executed by a guardian on behalf of a minor, the same principle and its limitations applicable to ordinary bonds was applied in Madras. Under Hindu law the enforceability of a promissory note executed by a guardian of a minor depends upon the binding nature of the debt for which the promissory note was executed. 23. I shall now take up the third point viz., the competency and the limits of the rights of a guardian to deal with the immovable property of his ward. Though the extent of the authority of a guardian over the property of the minor has not been a specific subject of discussion by any Hindu Law Smrithi writers there are a few texts which throw some light on the subject. Mitakshara lays down as a general rule that immovable properties cannot be alienated by a father except with the consent of all his sons. But the text of Vyasa gives some exceptions to the general rule. It reads :
Even a single individual may conclude a donation, mortgage or sale of immovable property during a season of distress or for the sake of the family and especially for pious purposes.
Vignaneshwara in commenting on this text observes;

While the son and grand-sons are minors incapable of giving their consent to a fit and the like; or while brothers are so and continue un-separated, even one person, who is capable, may conclude a gift, hypothecation or sale of immovable property if a calamity affecting the whole family required it, or the support of the family renders it necessary or indispensable duties such as the obsequies of the father of the like make it unavoidable.
But for the first time the question of the competency of guardian fell to be considered in the leading case on the subject 6 Moo Ind App 393 (PC) (O). The facts in that case were: The appellant was a banker and had money transactions with the paternal ancestors of the plaintiff. Alter the death of the plaintiff's father his mother acting as guardian from time to time settled accounts with the creditor and also executed mortgages of some villages in his favour. Finally a sum of Rs. 15,000/- was found due and for that she executed a mortgage bond in favour of the creditor. After attaining majority the plaintiff filed a suit for possession of the Zamindari estate free from the mortgage executed by his mother. The Judicial Committee held that the mortgage was binding on the minor but remanded the case for taking accounts in the height of the observations made by them. This decision for the first time laid down in clear terms the law on the subject. At page 424 their Lordships stated:
The power of the manager for an infant heir to charge an estate not his own, is, under the Hindu law, a limited and qualified power. It can only be exercised rightly in case of need, or for the benefit of the estate. But where, in the particular instance the charge is one that a prudent owner would make, in order to benefit the estate, the bona fide lender is not affected by the precedent mismanagement of
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the estate. The actual pressure on the estate, the danger to be averted or the benefit to be conferred upon it in the particular instance, is the thing to be regarded. But of course, if that danger arises or has arisen from any misconduct to which the lender is or has been a party he cannot take advantage of his own wrong to support a charge in his own favour against the heir grounded on a necessity which his wrong has helped to cause. Therefore the lender in this case, unless he is shown to have acted mala fide, will not be affected though it be shown that with better management the estate might have been kept free from debt. Their Lordships think that the lender is bound to inquire into the necessities for the loan & to satisfy himself as well as he can with reference to the parties with whom he is dealing that the Manager is acting in the particular instance for the benefit of the estate. But they think that if he does so inquire and acts honestly the real existence of an alleged sufficient and reasonably credited necessity is not a condition precedent to the validity of his charge, and they do not think that, under such circumstances, he is bound to see to the application of the money. It is obvious that money to be secured on any estate is likely to be obtained on easier terms than a loan which rests on mere personal security and that, therefore the mere creation of a charge securing a proper debt cannot be viewed as improvident management; the purposes for which a loan is wanted are often future, as respects the actual application and a lender can rarely have unless he enters on the management, the means of controlling and rightly directing the actual application. Their Lordships do not think that a bona fide creditor should suffer when he has acted honestly and with due caution but is [himself 'deceived.
24. The classic passage was the foundation of a long catena of decisions delivered by various High Courts to meet different situations. The twin doctrine of necessity and benefit has equally been invoked both in the case of alienations made or mortgages effected by a guardian and also in the case of simple money debts. The principles laid down therein were applied not only to transactions effected by 'DE JURE' guardians but also by de facto guardians. The passage presupposes that a guardian could borrow money for the benefit of the estate or in case of necessity but it goes further and holds that the guardian can even charge the properties for the purpose of raiding the said loan. The use of the words 'lender' and 'loan' in the course of the passage and the statement that the mere creation of a charge securing a proper debt cannot be viewed as improvident management indicate that they extended the principle viz., that the guardian can borrow for necessity and for the benefit of the estate to the case of a mortgage or charge by him. The Madras decisions which I have already discussed understood this passage throughout in that light and have held that the principles laid down govern the contractual competency of a guardian under certain circumstances. 25. It is not necessary to consider the innumerable decisions applying the aforesaid principles to alienations made or mortgages or charges effected by a de facto or de jure guardian for necessity or for the benefit of the estate. I have already referred in another context to the application of the same principles to simple debts contracted by a guardian and even to promissory notes executed by him. But the question germane to the present enquiry is whether a contract of sale or purchase entered info by a guardian for necessity or for the benefit of the estate can be enforced against the minor's estate. This question was raised and decided in 'Krishnaswami v. Sundarappayyar' 18 Mad 415 (X). There, the mother and guardian of a Hindu minor entered into a contract for the sale of his land. The vendee sued the minor by his mother and guardian ad litem for specific performance of the contract and for possession. It was found that the contract was binding on the minor. The learned Judges Muttuswami Ayyar and Best JJ. held that the suit was maintainable. This is, therefore, a direct case on the point. The learned Judges made two points in coming to that conclusion (1) S. 11, Contract Act does not exclude the power of the guardian of a minor to represent him and enter into contracts on his behalf either beneficial or necessary to the minor under Hindu law and (2) the English law that a minor cannot claim specific performance proceeds on the ground of want of mutuality and that doctrine has no application to this country.
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This decision is a clear authority for the position that a guardian under Hindu Law can enter into a contract on behalf of his ward for purposes binding on the estate and that such a contract is specifically enforceable. But unfortunately this decision was not cited before the Judicial Committee in 39 Cal 232 (PC) (A). It was assumed in that case that the guardian executed the agreement for the purchase of certain immoveable property on behalf of the minor. In denying the right of the minor who attained majority to enforce the said agreement for specific performance, their Lordships made the following observations at page 237:
They are however of opinion that it is not within the competence of a manager of a minor's estate or within the competence of a guardian of a minor to bind the minor or the minor's estate by a contract for the purchase of immovable property and they are further of opinion that as the minor in the present case was not bound by the contract, there was no mutuality and that the minor who has now reached his majority cannot obtain specific performance of the contract.
26. The first thing to be noticed in this case is that the parties are Muhammadans and it does not appear from the judgment that they were governed by Hindu law. The question therefore whether the agreement to purchase by the guardian was for necessity or for the benefit of the minor under Hindu law could not have arisen for consideration in that case. Secondly the case of 6 Moo Ind App 393 (PC) (O) for the same reason was neither cited nor considered in that case. Further it deals with the case of an agreement to purchase and the facts do not disclose that the purchase was for the benefit of the minor. In the circumstances, the decision should be confined to the case of an agreement to purchase entered into by a guardian on behalf of a minor not governed by Hindu law. Even the main ground of the decision viz., want of mutuality has ceased to be inflexible rule in England and is not of universal application. The doctrine of mutuality means that at the time the contract was entered into, it could have been enforced by either of the parties against the other. But many exceptions have been engrafted by English law on the general principle of equity. It is not observed in cases of conditional contracts, unilateral contracts, waiver by conduct, transfers with incidental covenants, contracts of minors embodied in compromise decrees and contracts to transfer future property. 27. In - 'Salisbury v. Hatcher', (1842) 12 LJ Ch 68 (Y), Knight Bruce V. C. stated the scope of the doctrine as follows:
In cases of specific performance the want of mutuality is a consideration generally material, but it is contrary to principle and authority to say that perfect mutuality is requisite in order to call a Court of equity into action. There are cases in which plaintiffs have had a decree for specific performance against defendants who when the bill was filed were not in a condition to enforce specific performance in their own favour. Where no legal invalidity affects the contract, the enforcement of it in this Court is a matter of judicial discretion.
28. These observations also indicate that under certain circumstances Courts in exercise of judicial discretion can override the doctrine of mutuality. See "Law of Equity" by G. C. V. Subbrao, pp. 512, 513 and 514. 29. Under Hindu law, as I have already indicated in a different context, a guardian has legal competency to enter into a contract on behalf of a minor for necessity or for the benefit of the estate. In the case of contract coming within the four corners of that doctrine no question of invalidity arises. It is valid at the time of inception and if either of the parties can enforce the contract against the other at the tune it was entered into, the test of mutuality is also satisfied. Unfortunately the decision in 39 Cal 232 (PC) (A) was applied in a long catena of decisions in different Courts and suits for specific performance of contracts of sale or purchase or for reconveyance filed at the instance of either party were dismissed by all the Courts on the ground of want of mutuality. See - 'Narayana Rao v. Venkata Subba Rao', AIR 1920 Mad 423 (Z); - 'Ramakrishna Reddiar v. Chidambara Swamigal', MANU/TN/0223/1927 : AIR 1928 Mad 407 (ZD; - 'Singara Mudali v. Ibrahim Baig', MANU/TN/0021/1946 : AIR 1947 Mad 94 (Z2) & MANU/TN/0156/1932 : AIR 1933 Mad 322 (C). The other High Courts also followed suit. See - 'Swaralh Ram Ram Saran v. Ram Ballabh', MANU/UP/0116/1925 : AIR 1925 All 595 (Z3); - 'Srinath v. Jatindra', MANU/WB/0704/1925 : AIR 1926 Cal 445 (Z4); - 'Nripendrachandra Sarkar v. Ekherali Joardar', MANU/WB/0148/1929 : AIR 1930 Cal 457 (Z5) and - 'Malla v. Muhammad Sharif, AIR 1927 Lah 355 (1) (Z6).
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30. At the stage in 1948 the Judicial Committee gave another decision on the scope of S. 53-A, T. P. Act and though it revolutionised the settled law on the subject, in my view it approached the question from the correct perspective. In MANU/PR/0005/1948 : AIR 1948 PC 95 (B) their Lordships of the Judicial Committee held that a minor was a "transferor" within the meaning of S. 53-A and therefore a transferee from him who was in possession was protected by S. 53-A of the Act. As much of the discussion at the Bar turned upon the scope of this decision and as there is also some conflict of judicial opinion on the interpretation of the views expressed therein, it is necessary to consider that case in some detail. The facts there were: The respondent, being minor by guardian and mother agreed to sell certain land to the appellants, the purchase price to be applied in discharging a debt owing to the appellants which had been incurred by the respondent's father. The appellants were let into possession of the land but the provision in the contract that the sale deed was to be executed and registered was never complied with. The minor represented by his mother filed the suit claiming possession of the land contracted to be sold. The defendant relied upon the provisions of S. 53-A, Transfer of Property Act which reads:
Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty and the transferee has in part performance of the contract taken possession of the property or any part thereof or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then notwithstanding that the contract, though required to be registered, has not been registered, or where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefore by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continue in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.
31. It will be seen from the aforesaid provisions that "transferor" referred to in that section is the person who entered into a contract to transfer for consideration any immoveable property by writing signed by him or on his behalf. Unless the minor enters into a valid contract to transfer his immoveable property the provisions of S. 53-A cannot obviously be invoked. It therefore became necessary for the Judicial Committee to consider whether it was within the powers of the mother as guardian to enter into a contract and whether the contract so entered into was a valid contract. At p. 96 their Lordships observed:
Their Lordships entertain no doubt that it was within the powers of the mother as guardian to enter into the contract of sale of 29-11-1935 on behalf of the respondent for the purpose of discharging his father's debts and that if the sale had been completed by the execution and registration of a deed of sale, the respondent would have been bound under Hindu law.
32. This is a clear statement recognizing the right of the guardian to enter into a contract to sell for a purpose binding on the estate. Their Lordships after noticing the provisions of S. 11, Contract Act proceeded to state at page 96:
It is clear that, if the mother and guardian had taken no part at all in the transaction, the respondent could not have entered into a valid contract to sell the land in suit to the appellants but it is equally clear that such a contract could, and did come into existence in the present case.
33. This passage is clear and unambiguous. It shows that such a contract entered into by the guardian on behalf of the minor for a binding purpose is a valid contract. Then they cited the following passage from Pollock and Mulla's Indian Contract and Specific Relief Acts, Edn. 7, p. 70:
A minor's agreement being now decided to be void, it is clear that there is no agreement to be
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specifically enforced; and it is unnecessary to refer to former decisions and distinctions, following English authorities which were applicable only on the view now overruled by the Judicial Committee. Xx xx xx It is however different with regard to contracts entered into on behalf of a minor by his guardian or by a manager of his estate. In such a case it has been held by the High Courts of India, in cases which arose subsequent to the governing decision of the Judicial Committee, that the contract can be specifically enforced by or against the minor, if the contract is one which it is within the competence of the guardian to enter into on his behalf so as to bind him by it and further if it is for the benefit of the minor. But if either of these two conditions is wanting, the contract cannot be specifically enforced at all.
The approval of this passage by the Judicial Committee puts beyond any doubt the legal position. The passage makes a distinction between void contracts entered into by minors in England and contracts entered into by guardians on behalf of minors in India for purposes binding on the estate. The next passage in the judgment refutes the contention that their Lordships did not approve of the passage extracted from Pollock and Mulla for they say:
In the present case neither of the two conditions mentioned is a wanting, having regard to the findings in the Courts in India. It would appear, therefore, that the contract in the present case was binding upon the respondent from the time when it was executed. If the sale had been completed by a transfer, the transfer would have been a transfer of property of which the respondent and not his mother, was the owner. If an action had been brought for specific performance of the contract, it would have been brought by or against the respondent and not by or against his mother.
34. What clearer exposition of the law is necessary than the aforesaid passage? The passage extracted from the judgment leaves no doubt in my mind that the Judicial Committee recognised that in India a guardian has legal competency to enter into contracts to sell the property of a minor for purpose binding on the estate and in such a case if a default is made the vendee or the guardian representing the minor as the case may be can file a suit for the specific performance of the contract. As there is legal competency on the part of the guardian in the circumstances, no question of mutuality can arise at all. 35. It is said that the decision in 39 Cal 233 (PC) (A) has not teen referred to in this judgment. But the arguments advanced by Sir Herbert Cunlifee K. C. at page (of ILR 1949 Mad 143 ) show that the said decision was cited. But presumably because it was not relevant, it was not referred to in the judgment. What is more the decision in 6 Moo Ind App 393 (PC) (O) which was omitted to be considered in the earlier decision was noticed in the later one in support of Their view that the guardian's acts are on behalf of the minor. I have, therefore, no hesitation to hold that the considered judgment of the Judicial Committee in MANU/PR/0005/1948 : AIR 1948 PC 95 (B) must be taken as overruling all the previous decisions based upon 32 Cal 232 (PC) (A). 36. After the decision of the Judicial Committee there was again some conflict of view on the question whether and to what extent the said decision overruled the earlier decisions. In MANU/TN/0112/1951 : AIR 1951 Mad 431 (D) Viswanatha Sastry J., relying upon the decision of the Judicial Committee in MANU/PR/0005/1948 : AIR 1948 PC 95 (B) held that a contract for the sale of the property of a minor entered into by his mother and guardian for purpose considered necessary and proper in Hindu law would be binding on the minor from the time when the contract is entered into and is capable of being enforced against him. Though the learned Judge exhaustively considered the question and was inclined to hold that under Hindu law, whether it is a contract of sale or purchase on behalf of a minor, it would be binding and enforceable if the sale or purchase was for necessity and for the benefit of the estate, he distinguished the decision in 39 Cal 1232 (PC) (A) on the ground that it related to a contract entered into by a guardian on behalf of a minor to purchase the property. The learned Judge did not express his final opinion in the case of agreement of sale by a guardian on behalf of a minor as obviously he could not do so contrary to the decisions of the Full Bench and Division Bench of the Madras High Court, I have carefully gone through the judgment. I entirely agree with the view expressed by him. I would go further and hold that there cannot be any essential distinction between a contract of sale and contract of purchase. The difference is only one of degree.
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It may perhaps be more difficult in the case of a purchase by a guardian on behalf of a minor to sustain it on the ground of necessity or benefit but circumstances can easily be conceived when even a purchase of land by a guardian on behalf of a minor could be for necessity or for the benefit of the estate. I cannot, therefore, find any difference in principle between the case of purchase by a guardian and that of a case of a sale by a guardian. Both depend for their validity on the competency of the guardian acting within the scope of his power under Hindu, law. 37. Lodge C. J., and Ram Labhaya J. of the Assam High Court held in AIR 1949 Ass 57 (E) that the natural guardian of a Hindu minor is not competent to bind the minor or his estate by a contract for sale even though it may be for necessity or for the benefit of the minor. In coming to that conclusion they relied upon the decision of the Judicial Committee in 39 Cal 232 (PC) (A). When the decision of the Judicial Committee in AIR 194S PC 95 (B), was cited, the learned Judges ruled it out on the ground that the point before their Lordships, was very different from that which arose in 39 Cal 232 (PC) (A), and that the said authority had got no bearing on the case before them. When the passages in Pollock and Mulla's Indian Contract and Specific Relief Acts on which the Judicial Committee relied were cited they ignored them on the ground that the said observations must have been based on decisions given by High Courts in India before the decision in 39 Cal 232 (PC) (A). The way in which the learned Judges distinguished the decision of the Privy Council in AIR 1043 PC 95 (B), does not appeal to me. As aforesaid the Privy Council in express terms recognised the competency of a guardian to enter into a contract on behalf of a minor to sell his property for a purpose binding on the estate. I cannot therefore follow this decision. 38. A similar question arose for decision before a Full Bench of the High Court of Hyderabad in AIR 1952 Hyd 120 (FB) (F). The learned Judges relying upon the decision of the Judicial Committee in MANU/PR/0005/1948 : AIR 1948 PC 95 (B), held that a minor can enforce a suit for a specific performance when the contract, be it a purchase or a sale, is for the benefit of the minor's estate. Deshpande J. who expressed a dissenting view also agreed with the other learned Judges that a suit for a specific performance can be instituted in case the contract was for the sale of the property of the minor by a guardian but that a contract for the purchase of immovable properties cannot be enforced for the reasons already stated. I agree with the majority view and I cannot on principle make a distinction between a contract of sale and that of purchase if as a matter of fact it is established that the guardian entered into the contract for necessity or for the benefit of the estate. 39. The matter may be looked at from a different perspective. Assuming there is difference in law vis-a-vis the power of the guardian of a minor to incur debts and to deal with immoveable property, the question is to which category contracts of sale or purchase of immoveable properties pertain. It is a settled law that a guardian of a minor can alienate the property of his ward or otherwise charge it for purposes binding on the estate. See 6 Moo Ind App 393 (PC) (O). An agreement to convey or purchase is only a preliminary step in completing a transaction of sale or purchase as the case may be. Without negotiations and without any agreement oral or in wilting rarely is a sale deed executed and registered. To hold that guardian can execute a sale deed in respect of a specific property but he cannot legally enter into an agreement to convey or purchase the same is incongruous and illogical. The question is whether such a contract partakes of the nature of simple debts or forms an integral part of a transaction dealing with property. It is true that under S. 54, Transfer of Property Act a contract of sale of immoveable property does not of itself create an interest in or charge on such property. But that section does not exhaust the relations which flow from a contract for sale of immoveable property. Under S. 40, Transfer of Property Act, where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immoveable property but not amounting to an interest therein or an easement thereon such right or obligation may be enforced against a, transferee with notice thereof or a gratuitous transferee of the property affected thereby but not against a transferee for consideration and without notice of the right or obligation nor against such property in his hands. This section indicates that though the benefit of an obligation arising out of a contract is not an interest in immoveable property or easement thereof it is an obligation annexed to the ownership of immoveable property. Section 27(B), Specific Relief Act also recognises the right of a person under a prior contract to specifically enforce it against any other person claiming under the same vendor by a title arising subsequent to the contract except a transferee for value
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who has paid his money in good faith and without notice of the original contract. This section also recognises the obligation under a contract as one annexed to immovable property. Illustration (g) to S. 3 of the same Act reads:
A buys certain land with notice that B has already contracted to buy it. A is a trustee within the meaning of this Act for B of the land so bought.
Section 91. Indian Trusts Act also lays down:

Where a person acquires property with notice that another person has entered into an existing contract affecting that property of which specific performance could be enforced the former must hold the property for the benefit of the latter to the extent necessary to give effect to the contract.
40. By reason of the aforesaid two sections a purchaser with notice of the prior contract is in the position of a trustee and he can only stand in the shoes of the vendor and receive the purchase money from the person with whom the earlier contract was entered into. In other words, a party claiming under an earlier contract has an equitable right to enforce his contract against a subsequent purchaser and perfect his title by obtaining a sale deed from him. It follows that though the contract does not create an interest or a charge in favour of a party, an obligation arising out of a contract is annexed to the property and is enforceable against the purchaser of the same with knowledge of the earlier contract. If so, contracts to sell or purchase property are transactions closely connected with dealings in immoveable property by a guardian giving rise to obligations annexed to that property. They cannot be equated with contracts of loans imposing personal obligations on the minor. If as laid down in the decision of 6 Moo Ind App 393 (PC) (O), a guardian can alienate property tor necessity or for the benefit the estate of his ward there cannot be any reason why a different rule should be applied to contracts which form only one of the necessary steps in a transaction of sale or purchase as the case may be. 41. Further it cannot be laid down as an inflexible rule that under no circumstances the personal liability of a minor can be enforced against him. If that was so even in the case of a sale or mortgage executed by a guardian on behalf of a minor for necessity or for the benefit of the estate, there would be personal obligations to be enforced against the minor under certain contingencies. If any of the covenants incorporated in the sale deed are broken by a guardian or the statutory covenants embodied in S. 55, Transfer of Property Act or not carried out, it cannot be contended that they could not be enforced against the guardian representing the minor. After the sale deed was executed if the guardian did not pay the consideration certainly the vendor could recover the money from the estate of the minor. If the title was defective, the estate of the minor would be liable for damages. But the Learned Counsel of the respondents contends that the said obligations and liabilities would arise only alter a valid transfer deed is executed and that they have bearing in a case where the competency of the guardian to enter into a contract itself is questioned. While I appreciate the distinction, the fact remains that a minor under Hindu law is not completely immune from the enforceability of personal obligations against him. If he was liable after the sale deed was executed by the guardian. I do not see any justification for holding that the obligation to execute a sale deed is not binding on him. All the Courts have held consistently relying upon the decision in 6 Moo Ind App 393 (PC) (O) that the guardian of a minor can alienate his property or charge it for necessity or for the benefit of the estate. There is an unbroken line of judicial opinion in Madras that the same principle will apply to simple debts incurred by a guardian or to promissory notes executed by him on behalf of the minor. To put it differently such debts would be enforceable against the minor's estate if they were incurred for purposes binding on the estate. But other High Courts refused to extend the principle of the decision in 6 Moo Ind App 393 (PC) (O) to contracts of simple debts and to promissory notes executed by a guardian on behalf of a minor on the ground that by recognising the validity of such contracts the guardian would be enforcing the personal liability of the minor. All the Courts again following the decision in 39 Cal 232 (PC) (A) have unanimously held till the Privy Council decision in MANU/PR/0005/1948 : AIR 1948 PC 95 (B) that a contract of sale or purchase entered into by a guardian on behalf of a minor could not be enforced against the minor on the ground of want of mutuality. But as I
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have pointed out the said view is no longer sound in view of the later Privy Council decision in MANU/PR/0005/1948 : AIR 1948 PC 95 (B) which in clear and unambiguous terms ruled otherwise. 42. It is said that in the case of simple debts the whole property of the minor would be liable for being taken in execution of the decree while in the case of a sale of a specific item by the guardian the misconduct of the guardian can be localised and exposed. In the case of a simple debt, the argument proceeds, the creditor can attach any property of the debtor or by allowing interest to accumulate may under certain circumstances bring the entire property to sale whereas in the case of an alienation on behalf of the minor, it can easily be proved that a particular property was not sold for necessity and if it is proved otherwise, he would lose only that property. But these arguments have really no force for the simple reason that even in the case of a simple debt, if it is established that the debt was not incurred for necessity or for the benefit of the estate, no decree can be passed against the minor. Assuming there is any such principle underlying the rate of immovable property and the incurring of a simple debt the same considerations that apply to the sale of immoveable property would apply also to an agreement to sell that property, for, in both the cases, the property conveyed or purchased or to be conveyed or purchased is localised and there is no danger of the entire property of the minor being proceeded against. Agreements of sale and purchase therefore must be placed in the same category as sales and purchases executed by a guardian. 43. The question may be approached from a different perspective i.e., from the standpoint of the power of a guardian to Sell his ward's properties under certain circumstances. A guardian who has entered into a contract with a third party to see his ward's property for necessity or for benefit has undoubtedly the right and power to execute a sale deed pursuant to the agreement entered into by him. What the Court in a suit for specific performance does is only compel him to do what he should have done. In - 'Abdul Hameed Sait v. Provident Investment Co. Ltd.', MANU/TN/0419/1954 : AIR 1954 Mad 961 (FB) (Z7) a Full Bench of the Madras High Court, of which I happened to be one of the members, held under analogous circumstances, that a Court in selling the property of the son in execution of a decree obtained against the father exercises only the power whereunder the father himself could have sold the property. After considering the case law on the subject at page 978 I observed as follows:
But when the creditor chooses to obtain a decree only against the father and seeks to bring the entire family property to sale the Court by selling the property does only what the father could have done. The power of the Court to sell is co-extensive with the power of the father to sell. The existence and continuance of the power of the father and not the exercise of it by him enables the Court to sell the properties in his stead. If he exercises the power to sell no question of the Court selling the property would arise and indeed the Court's intervention becomes necessary only when a father refuses or neglects to exercise that power. The Court's power to sell comes to an end when the father's power ceases.
44. The aforesaid observations can equally apply to the case of a guardian for the Court by directing the guardian to sell or if he makes a default by selling the property itself is in effect and substance really exercising the power of the guardian to sell the property. If a guardian is competent to sell the property in order to pay off debts binding on his ward, the Court may also compel him to do so. In this view, no question of making the minor personally liable arises. 45. This leads to the consideration of the question how far and to what extent these principles have been overruled or modified by the Federal Court in their two judgments in 'Sriramulu v. Pundarikakshayya (G) and 'Bapayya v. Pundarikakshayya (G1)' The facts in MANU/FE/0019/1949 : AIR 1949 FC 218 (G) were: One Chelamayya Chowdari had borrowed a sum of Rs. 3,000/- on a promissory note from the defendant. He died leaving two widows empowering his junior widow to take a boy in adoption. Pursuant to that power the plaintiff was taken in adoption. The adoptive mother as de jure guardian of the minor renewed the promissory note. On the same day she executed another promissory note in respect of a further sum alleged to be due to the defendant for professional work done by him during the life-time of Chelamayya. Some time thereafter, she executed a consolidated promissory note in renewal of the two promissory notes.
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After her death the natural father of the adopted son entered upon the management of the estate and professing to act as guardian of the respondent, renewed the promissory note in the name of the minor. Later on, he executed a sale deed conveying the immoveable properties mentioned in the plaint to the creditor in discharge of the amount due under the aforesaid promissory note and a small cash paid to him towards registration charges. The Federal Court held that a de facto guardian had no power to execute promissory note in renewal of earlier promissory notes and therefore the said promissory note could not be a valid consideration. Though the learned Judges who formed the Bench agreed on the conclusion, they have given different reasons for arriving at that conclusion. It is, therefore, necessary to ascertain the majority view, which would only be binding on this Court. The learned Chief Justice pronounced at page 221 the following three points for consideration:
(1) Whether an alienation (mortgage or sale) of a minor's immoveable property is permissible in case of necessity? (2) Whether there is liability for money borrowed for necessity and if so in what manner it could be so borrowed and (3) Whether a negotiable instrument can be executed for or in the name of the minor so as to be enforceable against the minor's estate.
46. Though the questions propounded are general in terms applicable to de facto as well as de jure guardians the discussion in the judgment clearly indicates that his Lordship confined his opinion only to a de facto guardian. The following passage from the judgment at page 222 indicates the scope of the judgment:
The principle of the minor's estate being liable in case of necessity has been recognised by an Act in India in 1872 in S. 68, Contract Act which is applicable to all persons. Under that section it is provided that if necessaries were supplied to a minor, his estate could be made liable for the same. The statement of law by the Privy Council in 6 Moo Ind App 393 (PC) (O) has been followed in India for nearly a century and titles to properties have been created on that basis. Similarly loans taken for the necessity of a Hindu minor have been ordered by the Courts to be repaid out of the minor's estate for several years past. It it necessary to have a discussion here on that question. That, however, will be no justification for extending the application of the principle of necessity to transactions, which do not strictly conform to that test........As the minor cannot enter into a contract, I am reluctant to accept the argument that a de facto manager is the authorised agent of the minor and can therefore make his estate liable even in the case of necessity by making a contract in the name of the minor.
47. After discussing the point to some extent, his Lordships says:
In my opinion, therefore, the law as it stands permits a 'de facto' manager to borrow money for the necessity or the benefit of the minor's estate so as to make the minor's estate liable for the loan when he can do so without making out a contract between the minor and the creditor.
48. It is therefore obvious that the learned Chief Justice confined his remarks to the case of a de facto manager and in the learned Judge's view he can borrow money for necessity only if he can do so without making out a contract between the minor and the creditor. 49. But in regard to promissory notes the learned Chief Justice observes:
In respect of borrowing money on the security of negotiable instrument the same test should be applied but with greater strictness because by giving a negotiable instrument in the name of a minor, a de facto manager is bringing into existence a contract between a minor and the creditor and which contract under the Negotiable Instruments Act creates rights and privileges in favour of third parties e.g., presumption as to consideration of rights of holders in due course etc..... If the lender files a suit on the debt (apart from the negotiable instrument) he will have to satisfy the conditions necessary to make the minor's estate liable in respect of the transaction sought to be enforced by him.
50. But Fazal Ali J. went further and covered a wider field. The learned Judge deduced the following principles from
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a discussion of the case law.

(1) The manager of an infant's estate can deal with the minor's estate by way of mortgage, in case of need or for the benefit of the estate. (2) He cannot bind the minor by contract or under obligations and then transfer them to the minor's estate so as to enable the creditor to establish a direct relation between himself and the estate. (3) In certain cases (which must presumably be cases of necessity or benefit to the minor), he might be able to show that the estate ought to bear the burden which he had taken upon himself.
51. These principles are applicable according to the learned Judge to both de jure and de-facto guardians. In case where the third principle can be invoked his Lordship says that 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 and that right must usually be subject to the state of accounts between the guardian and his ward. According to this view, a guardian whether de jure or de facto cannot enter into a contract bringing about a direct contractual relationship between the creditor and the minor or the minor's estate though the creditor under certain circumstances relying upon the principle of subrogation, can enforce the lights of the guardian against the minor's estate. 52. In regard to the liability of a minor on a promissory note executed by the guardian the learned Judge says at page 227 :
A promissory note executed by a guardian an behalf of a minor is not a document containing an unconditional undertaking to pay a certain sum, because the undertaking is subject to two conditions. Firstly, that the note is to be enforced against the minor, if necessity is proved and secondly that the amount is not payable except out of the estate of the minor, the creditor being thus unable to proceed personally against the guardian or the minor. It is clear that the negotiable quality of a mercantile instrument such as a promissory note will be greatly affected by reading these conditions into it.
53. Mukherjee J. propounds the question to be decided at p. 234 in the following terms :
This leads us to inquire as to how far a guardian in Hindu law whether de jure or de facto can bind his ward personally by a simple contract debt, or by a covenant or promise to pay money without creating a charge on his properties and to what extent, if any, such liability could be enforced against the estate of the minor.
After discussing the case law on the subject, the learned Judge observes at page 237 as follows :
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 only 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 well established principles of the law of contract and the ordinary rules of procedure in personal actions:
The learned Judge proceeds to state :

When the guardian borrows money on a bond in his capacity as guardian but excludes his personal liability altogether there could be no suit on such a bond against the minor's estate, for, the guardian can claim indemnity when he is personally liable and it is only by subrogation to the rights of the guardian that
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the creditor can have recourse to the minor's estate.
The learned Judge concludes his reasoning with the following words :
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 this way effect can be given to the personal law of the Hindus in respect of the liability of a minor's estate for debts contracted by the guardian for legal necessity without infringing in any way the basic principles of the law of contract and in this way alone, the different pronouncements of the Judicial Committee mentioned above can be consistently explained.
The view of the learned Judge has been clearly and unambiguously stated. Except in the case of necessaries governed by S. 68, Contract Act a guardian cannot borrow money on simple bonds or promissory notes directly making the minor or his estate liable to the creditor. 54. In regard to the liability of a minor on a promissory note the learned Judge observes :
A promissory note is payable unconditionally on demand and it has got some other special features, viz., there is a presumption that it was made for consideration and that the holder of it is a holder in due course. It has been suggested in some of the cases, which I have mentioned above that if a promissory note executed by the guardian is to be lead as an undertaking to pay out of the minor's estate, then it would not be payable at all events and that would detract from the unconditional nature of the undertaking which is the essential thing in a promissory note.
55. As regards the minor's liability under a promissory note executed by a guardian their Lordships unanimously held that the promissory note would be invalid as obviously the guardian cannot give an unconditional undertaking on behalf of the minor. The majority view in the case of simple debts is that both in the case of de facto as well as de jure guardians they have no power to incur contractual debts so as to bind directly the minor or his estate. 56. The Federal Court again considered a similar question in MANU/FE/0019/1949 : AIR 1949 FC 218 (G). This case came up before four learned Judges. Only Mahajan J. was not a member of the Bench which decided the previous case. The facts are the same as in the earlier one. The learned Judges came to the same conclusion. They held that the natural father or a minor who has been given away in adoption as the de facto manager of his estate has no authority to execute a promissory note on his behalf so as to bind his estate on the note itself and that such a promissory note cannot form a valid consideration for the sale of the minor's property by the de facto manager. 57. Kania C. J. followed his previous judgment. Fazl Ali and Mukherjea JJ. agreed with the view of the learned Chief Justice. Pausing for a moment here, if it is strictly construed the opinion of Fazl Ali and Mukherjea JJ. would mean that they confined their reasons for their conclusion to those expressed by the Chief Justice in the earlier decision. But I think they meant to say that they stood by their judgment in the connected case. Mahajan J. on the other hand, though on a consideration of the Hindu Law texts and the case law on the subject he comes to the same conclusion, was inclined to accept the view of the Madras High Court in regard to simple debts. But in regard to the rights of a de facto guardian to enter into contracts of loans on behalf of a minor he summarised his views at p. 254 as follows :
In the light of the above discussion the next question that falls for decision is whether a de facto guardian (manager) can also incur simple debts without charging the estate and bind the minor's estate though not making the minor personally liable for those debts provided those debts arc incurred in situations and circumstances stated in 6 Moo Ind App 393 (PC) (O). Contracts of loan entered into by the guardian, though they do not bind the minor's person, bind the estate by an indirect process. The guardian himself can become liable for those debts personally and is entitled to reimbursement and indemnity from the minor if the debts are incurred for the need of the minor. When the guardian
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himself has the right to reimbursement and the indemnity from the minor, the creditor on the rule of subrogation would no doubt be entitled to proceed against the property of the minor. This rule is subject to two exceptions in which a lender has direct recourse to the minor's estate where the contract is for necessaries supplied to or on behalf of the minor and where the liability is one to which the minor is subject under Hindu law. These exceptions are supported by judicial authority and on the principles of English law and in S. 68, Contract Act. In these two circumstances the guardian may directly incur a debt on behalf of the minor and bind his estate. Recourse to the principle of subrogation is unnecessary in such cases.
But in regard to a promissory note executed by a guardian on behalf of a minor, he observed at page 263 :
The result of the decision therefore is that a minor cannot be made liable under promissory note executed in his name by the guardian whether he is the natural guardian or the de facto guardian. A promissory note is a peculiar kind of document and by its very nature it imposes an onerous liability on the minor.... It is also clear that if the guardian has given a promissory note making himself personally liable, then he can be sued on the note and he can then seek reimbursement from the minor's estate and that otherwise the note can be sued as evidence of the debt. There is no liability on the promissory note; the liability, if any, is aliunde of the note i.e. on the loan itself, if it is for the benefit of the estate or is given for a pre-existing liability that has been discharged by a fresh borrowing taken for the purpose and evidenced by the note.
58. Having regard to the aforesaid two decisions, the majority view, which is binding on us, may be stated thus. A guardian cannot execute a promissory note on behalf of a minor for the reason that the minor's liability under Hindu law is conditional and, therefore no unconditional undertaking can be given by him. The guardian cannot also enter into contracts of loan making the minor or his estate liable direct to the creditor. But where a guardian personally makes -himself liable under a contract, the creditor can getting into the shoes of the guardian, indirectly work out the guardian's right of subrogation against the minor's estate. Except in the case of necessaries supplied to the minor governed by the provisions of S. 68, Contract Act, there cannot be direct recourse by the creditor against the minor or his estate. But no question was raised nor did the federal Court purport to decide any question as regards the competency of a guardian to enter into a contract of sale or purchase on behalf of the minor under circumstances binding on him under Hindu law. That question has no relation to the right of the guardian to incur simple debts or execute promissory notes in favour of creditors. It really pertains to the law of real property. Indeed Mahajan J. cites in extenso at pp. 253-254 the observations of the Privy Council in MANU/PR/0005/1948 : AIR 1948 PC 95 (B), with approval. It is, therefore, clear that the Federal Court in either of the two aforesaid decisions has not laid down any proposition, which is in conflict with that of the Privy Council in MANU/PR/0005/1948 : AIR 1948 PC 95 (B). The judgments of the Federal Court may, therefore, be confined to a guardian's power to incur simple debts and execute promissory notes on behalf of the minor, while the two decisions of the Privy Council in 6 Moo Ind App 393 (PC) (O) and MANU/PR/0005/1948 : AIR 1948 PC 95 (B), will govern the guardian's right to enter into transactions in regard to his ward's immoveable property. 59. Before concluding it is as well that I should express my opinion on a question that might incidentally arise. The question is whether the transaction should stand the test of the doctrine of necessity and benefit even on the date when the Court seeks to enforce it. To put differently, is it necessary that the validity of the transaction should depend upon the facts and circumstances existing on the date of the Court's decree as if the sale deed was executed on that date? I have held that if the contract of sale was for necessity or for the benefit of the minor, it would be valid and enforceable. The" competency of the guardian to enter into a valid contract is conditioned by the existence of facts attracting the aforesaid doctrine. Once the condition is fulfilled, the competency to execute it is complete. If that is conceded, it becomes enforceable and the supervening circumstances cannot invalidate it. But the existence of a valid
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and enforceable contract cannot in itself deprive the Court of its discretionary power to refuse to enforce the contract, if the supervening circumstances obviously affect the interests of the minor. In all transactions affecting a minor, a paramount duty rests upon a Court not to put its seal on transactions affecting his interests. Therefore, though the contract might be valid and otherwise enforceable, if at the time the Court was asked to enforce it transpires that the circumstances have so changed that it would obviously be unjust and detrimental to the interests of the minor to enforce it the Court may well in the exercise of its discretion refuse to give a decree for specific performance. For the aforesaid reasons, I would answer the question in the affirmative. Judgment of the Division Bench Persuant to the opinion expressed by the Full Bench, we set aside the decree of the learned Subordinate Judge and remand the matter to the lower Court to be disposed of in accordance with law. Costs will abide result. Court-fee paid on the appeal memo will be refunded. Manupatra Information Solutions Pvt. Ltd.
MANU/WB/0495/1981 Equivalent Citation: [1982]9TAXMAN206(Cal) IN THE HIGH COURT OF CALCUTTA IT Reference No. 379 of 1976 Decided On: 08.07.1981 Appellants: Commissioner of Gift Tax Vs. Respondent: Basant Kumar Aditya Vikram Birla Hon'ble Judges/Coram: Sabyasachi Mukharji and Sudhindra Mohan Guha, JJ. Counsels: For Appellant/Petitioner/Plaintiff: B.K. Bagchi and B.K. Naha For Respondents/Defendant: R.N. Bajoria, S.K. Bagaria and A.K. Dey Subject: Direct Taxation Catch Words Mentioned IN Acts/Rules/Orders: Gift-tax Act, 1958 [cease To Have Effect On Or After The 01.10.1998] - Section 2, Gift-tax Act, 1958 [cease To Have Effect On Or After The 01.10.1998] - Section 2(xii), Gift-tax Act, 1958 [cease To Have Effect On Or After The 01.10.1998] - Section 26(1), Gift-tax Act, 1958 [cease To Have Effect On Or After The 01.10.1998] Section 4; Income Tax Act, 1961 - Section 64(iii); Indian Contract Act, 1872 - Section 68; Indian Income-tax Act, 1922 - Section 16(3)(a)(iii), Indian Income-tax Act, 1922 - Section 16(3)(a)(iv) JUDGMENT
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Sabyasachi Mukharji, J. 1. This reference under section 26(1) of the Gift-tax Act, 1958, poses the following question:
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that jewellery, cash and fridge of the value of Rs. 67,744 given by the assessee to Smt. Jayasree Mohta, at the time of her marriage, did not fall within the ambit of the term "gift" as denned in section 2(xii) of the Gift-tax Act, 1958 ?
The assessee is an HUF. The proceedings out of which this reference arises relates to the gift-tax assessment for the assessment year 1970-71. The gift made by the assessee-HUF during the previous year included the following amounts given to Smt. Jayashree Mohta, daughter of Sri B. K. Birla, karta of the assessee-family, at the time of her marriage. Those were as follows:
Rs. "Jewellery worth Cash Fridge 47,000 11,000 9,744 67,744"
2. The assessee disclosed the value of all the gifts amounting to Rs. 1,33,744 which included this gift of Rs. 67,744. This amount of Rs. 67,744 was claimed as exempt on the ground that these were marriage expenses. The ITO disallowed the claim of the assessee. 3. Being aggrieved by the order of the ITO, the assessee went up in appeal before the AAC. It was contended on behalf of the assessee that an unmarried daughter was entitled to have her marriage expenses met by the HUF and, therefore, there was no question of any gift whatever in the HUF spending these amounts on her marriage. The AAC was of the view that there was no obligation on the HUF to spend on the marriage of the daughter as the daughter was not solely dependent on the HUF. He observed that the marriage expenses; were met-not by the HUF but by the karta or parents from their individual accounts. The AAC, therefore, upheld the order of the ITO. 4. The assessee went up in appeal before the Tribunal. It was urged before the Tribunal that there was an obligation on the HUF to perform the marriage of the daughters of the family and the amounts spent in the marriage in discharge of this obligation could not amount to a gift, as it would not amount to transfer without consideration. Reliance in this connection was placed on several passages in Mulla's Hindu Law as well as on the decision of the Judicial Committee in the case of Rajagopala Ayyar v. Venkataraman [1947] 51 CWN 829; AIR 1947 PC 122, and relying on this decision, the Tribunal was of the view that the assessee was under a legal obligation to give in marriage Smt. Jayashree Mohta and the expenditure incurred therein amounted to legitimate marriage expenses on Smt. Jayashree Mohta. The Tribunal further held that the amounts, in dispute did not fall within the ambit of the word "gift" as denned in section 2(xii) of the Gift-tax Act, 1958. Therefore, the Tribunal directed the exclusion of Rs. 67,744 from the computation of the value of the gift. Upon these facts, the question, as indicated above, has been referred to this court. 5. It must be mentioned that there is no dispute that the amount was spent by the HUF. It was also not in dispute that Smt. Jayashree Mohta was a member of the said HUF and on the marriage of an unmarried daughter of the said HUF the amount was spent. The Tribunal found that the amount spent was not out of proportion or was not in excess of the estate of the family. The Tribunal also proceeded on the basis that the expenditure incurred was the legitimate marriage expenses of Smt. Jayashree Mohta. The question is, in these circumstances, can it be said to be a case of
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gift in terms of section 2(xii) of the Gift-tax Act, 1958. The position of a daughter to have her marriage expenses met out of the joint HUF is clear in the exposition of law in Mulla's Hindu Law and we may refer to the observations in Mulla's Hindu Law, 14th Edn., where at p. 395, under art. 304(2), dealing with the property available for partition, it states:
(2) Marriage expenses, etc., after a suit for partition. -As to the marriage expenses of male members of the family it has been held by the Judicial Committee (Ramalinga v. Narayana [1922] LR 49 IA 168), reversing a decision of the Madras High Court (Narayana v. Ramalinga [1916] ILR 39 Mad 587; 36 IC 428), that since the institution of a suit for partition by a member of a joint family effects a severance of the joint status of the family, a male member of the family who is then unmarried is not entitled to have a provision made on partition for his marriage expenses, although he marries before the decree in the suit is made. The case, however, of an unmarried daughter stands on a different footing. Her right to maintenance and marriage expenses out of the joint family property is in lieu of a share on partition; provision should accordingly be made for her marriage expenses in the decree (Rajagopala Ayyar v. Venkataraman [1947] 51 CWN 829 (PC)). It is only for the marriage expenses of the father's daughters or sisters that provision should be made out of the joint family property. The marriage expenses of the son's daughters form only the liability of his branch and not of the whole joint family unlike the case of the father's daughters (Ramchandra v. Seeniathal ILR [1955] Mad 732). Thus, if A has a son S and a daughter D by one wife, and a son S2 and a daughter D2 by another wife, and S brings a suit for partition, and D2 is married after the institution of the suit, one-third of her marriage expenses should be deducted out of his one-third share and as regards one-third of the marriage expenses of D his one-third share in the property may be charged with such expenses. But S is not liable for the marriage expenses of his brother's (S2's) daughter, if any, she being the daughter of a collateral. Her marriage expenses should come out of her own father's share (Subbayya v. Ananta Ramayya [1930] ILR 53 Mad 84, 121). The same rule applies to the expenses of betrothal ceremonies of daughters. As regards the expenses of the thread ceremony of the members of the family it has been held that provision should be made for them on partition (Jairam v. Nathu [1906] ILR 31 Bom 54). As to marriage expenses while the family is joint, see Article 440 below.
6. As mentioned hereinbefore, the aforesaid observations deal with the marriage expenses at the time of partition or after a partition suit had been filed. But art. 440 at p. 518 of the said book deals with marriage expenses when the family is joint and it will be instructive to refer to the said exposition in Mulla's Hindu Law which states as follows:
440. Marriage expenses. -In the case of a joint family governed by the Mitakshara law, the joint family property is liable, while the family is still joint, for the legitimate marriage expenses of male members of the family Sundrabai v. Shivnarayana [1908] ILR 32 Bom 81), and also of the daughters of male members of the family (Vaikundam v. Kallapiran [1900] ILR 23 Mad 512). The decision in Subbayya v. Anantha Ramayya [1930] ILR 53 Mad 84 [FB] implies that a father in possession of a joint family property is under a legal obligation to get his daughter married. It follows that if a father so in possession neglects his duty, the mother may perform it and recover the expenses from her husband. When there is no joint family property in the hands of the father there is no legal obligation on his part to marry his daughter and bear the expenses of marriage. It is doubtful also whether the marriage of an infant girl could be brought under the head of 'necessaries' within the meaning of section 68, Indian Contract Act (Sadhu Laxmi Sundarammav Suryanarayana, MANU/TN/0119/1950 : AIR 1950 Mad 274. On the other hand, the proposition of law laid down in Sundari Ammal v. Subramania Ayyar [1902] ILR 26 Mad 505 that 'under the Hindu Law, a father is under no legal obligation to get his daughter married appears to have been stated too broadly. The obligation may not exist when the father is not a member of a joint family and has no ancestral property. The texts enjoin the payment of expenses of sanskaras or sacraments out of the family property. The marriage is a sanskara and its expenses, therefore, are to be provided for out of the joint family property. A debt contracted for the marriage of a coparcener or the daughter of a deceased
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coparcener in a joint Hindu family is a debt contracted for a family purpose and, therefore, for the benefit of the family. See arts. 224 and 427. As to expenses of marriage after the institution of a suit for partition, see art. 304(2). As to the power of a widow to provide for the marriage expenses of her daughter out of her husband's estate, see art. 181B(iv).
7. In this connection, it may not be inappropriate to refer to the observations of the Madras High Court in the decision mentioned hereinbefore, that is to say, the observations of the court in the case of Subbayya v. Ananta Ramayya [1930] ILR 53 Mad 84 [FB]. It was observed that in a suit for partition, instituted by a Hindu governed by the Mitakshara law, against his father and his step-brother, the father claimed a provision for the marriage expenses of his daughters, one of whom was married subsequent to the suit and before the decree and two others were unmarried, and the plaintiff had contended that he or his share in the family property was not liable therefore after the disruption of the coparcenary. Mr. Justice Ramesam and Mr. Justice Reilly held that the right of the daughter to her marriage expenses and maintenance was based on her right to or interest in "'the joint family property and was not based on the natural obligation of a father to maintain his children. Under this, according to 'their Lordships, the obligation of the family property was not affected by the partition between the father and his sons, but the son's share, on partition, was liable for the marriage expenses of the daughter of the father in proportion to the son's share in the property divided, and, on the other hand, for the marriage expenses of the daughter of the son, if any, the share of the father or of a collateral after partition was not liable and consequently the plaintiff should pay his father his one-third share of the sister's marriage expenses incurred after suit and his one-third share in the property should be charged with one-third of the expenses of the marriages of his unmarried sister. There, the majority of the learned judges explained the full implication of the observation in the case of Ramalinga Annavi v. Narayana Annavi [1922] ILR 45 Mad 489 (PC). The position, therefore, follows that" the legitimate marriage expenses of the daughters of the joint HUF will have to be met out of the joint HUF provided the family has the fund. If that is a right given to the daughter belonging to the joint Hindu family then the payment of money in discharge of that right by the karta can by no stretch of imagination be described as either a transfer or gift in terms of section 2 of the Gift-tax Act. We will, however, come to the actual definition in the section immediately. In this connection, it would be appropriate to refer to the observations of Mulla appearing at p. 302 under art. 243 of the same book which deals with alienation of property in case of legal necessity and clause (c) of art. 243 deals with marriage expenses of male coparceners and also of the daughters of the coparceners. Therefore, it again re-emphasises the point that marriage of daughters of the coparceners, that is to say, the unmarried daughter of the members of the joint HUF, if there be alienation on the occasion of marriage, would be alienation for the legal necessity and would be a valid alienation of the property under the Hindu law. We may also refer, in this connection, to the observations appearing at p. 425 under art. 333 where it dealt with a suit for partition, parties to the suit and what property it should comprise. Reliance was placed on the observations of the Supreme Court in the case of Guramma Bhratar Chanbasappa Deshmukh v. Mallappa Chanbasappa, MR 1964 SC 510. There, several questions came up for consideration before the Supreme Court. The questions were when there could be a valid adoption, under what circumstances the manager of a joint Hindu family had power of alienation, the right of alienation of the manager and gift to a stranger. But one of the main questions that came up for consideration was the right of the father to alienate the property to make a gift in favour of the daughter or sister by way of a reasonable provision for her maintenance. There, the Supreme Court dealt with the position under the Hindu law and referred to verses 27, 28 and 29 in Chap. I of the Mitakshara law which described the limitation placed on a father in making a gift of an ancestral estate. The Supreme Court thereafter observed that they did not expressly deal with the right of a father to make a provision for his daughter by giving her some family property at the time of her marriage or subsequently. That right, according to the Supreme Court, was defined separately by Hindu law texts and evolved by a long catena of decisions based on the said texts. Then, the Supreme Court referred to the relevant decisions in para. 16 of the said judgment at pp. 517-518 of the report. The Supreme Court thereafter went on to Observe that it was manifest that except the decision of a learned single judge of the Bombay High Court, all the decisions, according to the Supreme Court, on the subject, recognised the validity of a gift to a reasonable extent of a joint family property to a daughter under varying circumstances. The Supreme Court thereupon at para. 18 at p. 519 of the report observed as follows:
18. The legal position may be summarised thus : The Hindu law texts conferred a right upon a daughter or a sister, as the case may be, to have a share in the family property at the time of partition. That right was lost by efflux of time. But it became crystallised into a moral obligation. The father or
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his representative can make a valid gift, by way of reasonable provision for the maintenance of the daughter, regard being had to the financial and other relevant circumstances of the family. By custom or by convenience, such gifts are made at the time of marriage, but the right of the father or his representative to make such a gift is not confined to the marriage occasion. It is a moral obligation and it continues to subsist till it is discharged. Marriage is only a customary occasion for such a gift. But the obligation can be discharged at any time, either during the lifetime of the father or thereafter. It is not possible to lay down a hard and fast rule prescribing the quantitative limits of such a gift as that would depend on the facts of each case and it can only be decided by courts, regard being had to the overall picture of the extent of the family estate, the number of daughters to be provided for and other paramount charges and other similar circumstances. If the father is within his rights to make a gift to a reasonable extent of the family property for the maintenance of a daughter, it cannot be said that the said gift must be made only by one document or only at a single point of time. The validity or the reasonableness of a gift does not depend upon the plurality of documents but on the power of the father to make a gift and the reasonableness of the gift so made. If once the power is granted and the reasonableness of the gift is not disputed, the fact that two gift deeds were executed instead of one cannot make the gift any the less a valid one.
8. Learned advocate for the revenue, basing on the aforesaid observations of the Supreme Court, sought to urge that originally the texts gave the daughter or sister a share in the joint Hindu family property but that right was gradually lost and it became thereafter a moral right to maintain the daughter according to the financial and relevant circumstances of the family. It was sought, therefore, to be urged on behalf of the revenue that though there might be some moral, obligations on the karta of the joint Hindu family to incur certain expenses or give a daughter of the family in marriage, there was no legal right for the daughter to obtain marriage expenses nor was there any legal obligation on the karta to incur such expenses. We are, however, unable to accept this position. As we have noted, the Supreme Court, in the text quoted in the aforesaid decision, observed : How patent the obligation of the joint Hindu family was to get the daughter of the family married in the manner commensurate with the family status and it is well settled in Hindu law that wherever the laws of India admit the operation of a personal law, the rights and obligations of a Hindu are determined by the Hindu law, in its traditional law. The law as understood by the Hindus, is a branch of dharma. Its ancient, framework is the law of the Smritis. This position is amply clarified in the introduction to Mulla's Hindu Law, as referred to hereinbefore. 9. As a matter of fact, this traditional concept of Hindu law has not only not been altered but has been recognised by the Hindu Adoptions and Maintenance Act, 1956, which, inter alia, defines "maintenance" under sub-section (3)(b) as "in the case of unmarried daughter, also the reasonable expenses of and incidental to her marriage". The said statutory law imposes upon the karta or the father, as the case may be, the obligation of maintaining the daughter which as we have mentioned hereinbefore includes the obligation to incur expenses on the occasion of the marriage. This position was further clarified by the subsequent judgment in the case of V. D. Deshpande v. K. D. Kulkarni, MANU/SC/0409/1978 : AIR 1978 SC 1791, where it was observed that where a father was the karta of a joint Hindu family and the debts were contracted by the father in his capacity as manager and head of the family for family purposes, the sons as members of the joint family were bound to pay the debts to the extent of their interest in the coparcenary property. It was further observed that as the loan was borrowed for the purpose improving joint family lands, the loan would ipso facto be for legal necessity. It was observed at para. 7 referring to Mulla's Hindu law as follows (at p. 1794):
Where a father is the karta Of a joint Hindu family and the debts are contracted by the father in his capacity as manager and head of the family for family purposes, the sons as members of the joint family are bound to pay the debts to the extent of their interest in the coparcenary property. Further, where the sons are joint with their father and the debts have been contracted by the father for his own personal benefit, the sons are liable to pay the debts provided they were not incurred for illegal or immoral purposes. This liability arises from an obligation of religion and piety which is placed upon the sons under the Mitakshara law to discharge the father's debts, where the debts are not tainted with immorality. This -liability of the sons to pay the father's debts exists whether the father be alive or dead (para. 290, Mulla's Hindu Law, 14th Edn., p. 354). A further requirement is that for an effective partition of a Mitakshara joint Hindu family a provision for the joint family debts should be made. In order to determine what property is available for partition, provision must first be made for joint family 'debts which are payable out of the joint family property, personal debts of the father not tainted with immorality, maintenance of dependent female members and of disqualified heirs, and for the marriage
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expenses of unmarried daughters. This must be so because partition is of joint family property and if joint family debts are repaid before the partition only the residue would be available for partition. Therefore, if partition is effected before paying the debts, provision to pay the debts should be made so as to determine the residue available for partition.
10. Therefore, the marriage of dependent family members and on such occasion incurring legitimate expenses were recognised in the aforesaid passage referred to hereinbefore. At paras. 14 and 14A at pp. 1796 and 1797, the Supreme Court reiterated this position and referred to the previous decision of the Supreme Court in the case of Anihonyswamy v. M. R. Chinnaswamy Koundan, MANU/SC/0283/1969 : AIR 1970 SC 223. At p. 1801 of the report (AIR 1978 SC) the Supreme Court noted that in Hindu law two seemingly contrary but really complementary principles are there, one the principle of independent coparcenary rights in the sons which was an incident of birth, giving to the sons a vested right in the coparcenary property and the other the pious duty of the sons to discharge their father's debts not tainted with immorality or illegality, which laid open the whole estate to be seized for the payment of such debts. One of the pious obligations of the joint Hindu family in which there is an unmarried daughter is to get the daughter married and to incur legitimate expenses for such occasion. Such pious obligation, a concept of the Hindu law, has not only not been modified but strengthened by the subsequent legislation as we have mentioned hereinbefore. Reference in this connection may also be made to the decision of the Mysore High Court in the case of Devchand C. Shah v. Commissioner of Expenditure-tax MANU/KA/0043/1966 : [1970] 78 ITR 534, where the Division Bench of the Mysore High Court observed that the expenses for the marriage of a daughter of a Hindu family were a legitimate charge on the family estate. In the case of Rajagopala Ayyar v. Venkataraman [1947] 51 CWN 829 (PC), the Judicial Committee observed that the right of an unmarried daughter to maintenance and marriage expenses out of the Hindu joint family property was in lieu of a share on partition. Provisions should accordingly be made for her in a decree for partition. It was further observed that when the marriage of an unmarried daughter had already taken place with the money supplied by her mother there was no ground for refusing reimbursement. Therefore, both the legal as well as the moral obligation of a joint family to incur expenses on the occasion of the marriage of an unmarried daughter is recognised in Hindu law as enunciated by the aforesaid decision of the Supreme Court. The same position would more or less be apparent if we refer to the observations of the learned single judge of the Madras High Court in the case of Thiruvathammal v. Vagunathan, MANU/TN/0199/1952 : AIR 1952 Mad 479. There the learned judge observed that the father had a legal obligation to meet the marriage expenses of his daughter if it was shown that there was a joint family property, but if there was no joint family property, the learned judge observed, the obligation of the father was only a moral or natural obligation but not a legal obligation. 11. Our attention was, however, drawn on behalf of the revenue to certain observations in the case of CGT v. Tej Nalh MANU/PH/0258/1971 : [1972] 86 ITR 96, where the Full Bench of the Punjab and Haryana High Court observed that a gift by the karta of an HUF of any portion of the family property, whether to other coparceners or to strangers, was void per se and not merely voidable and, therefore, there would be no gift within the meaning of the Gift-tax Act, which would be liable to gift-tax. There, however, the court was not dealing with a gift on the occasion of a marriage. Mr. Justice D. K. Mahajan observed at p. 104 of the report that in the instant case before their Lordships the gift to the daughter was not made at or about the time of her marriage. Therefore, whether a gift on other occasions would be a valid gift or would be liable to attract the provisions of the Gift-tax Act or not is not a question with which we are concerned. 12. Reliance was also placed on certain observations in the case of CIT v. Ramgopal Rajgarhia MANU/BH/0080/1979 : [1980] 123 ITR 693 (Pat), where it was observed that a Hindu father or other managing member had power to make a gift within reasonable limits of ancestral immovable property for "pious purposes". In case of movable property such a gift need not be made for pious purposes. It could be made out of love and affection. There the court was concerned with a different situation, namely, a gift made to a son and the question was whether such a gift was within reasonable limits. We are not concerned with the same situation in the instant case. 13. Learned advocate for the revenue, however, seriously contended that even if it was not a gift under the Transfer of Property Act it was a gift in view of the language used in section 2(xii) of the Gift-tax Act, 1958. In section 2(xii) of the Act "gift" has been defined as follows:
2. (xii) 'Gift' means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth and includes the
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transfer or conversion of any property referred to in section 4, deemed to be gift under that section.
14. He contended that this was without consideration as there was no obligation. Secondly, he contended that it was not in money or money's worth. It is common case and no contention was urged before us that the amount could be considered to be a deemed gift under section 4 of the Act. So, we need not consider the implication of section 4 of the Act. We are, however, unable to accept the contention urged. As we have mentioned before, there was really no question of any gift or transfer because a daughter had a right so long as the family remained joint and had properties to have her marriage expenses met out of the family fund. The karta was meeting that obligation of the family to the daughter. Therefore, there was no question of anybody transferring any amount really or making any gift in the strict sense of the term. The daughter had the right under the law to have her marriage expenses met. In this connection, as some authorities were cited, We will briefly note the same. Our attention was drawn to the case of Keshub Mahindra v. CGT MANU/MH/0040/1968 : [1968] 70 ITR 1 (Bom.), where at pp. 19 to 21, the meaning of the expression "consideration in money or money's worth" was explained. What had happened in that case was that the payment was made in discharge of a legal obligation and payment was out of the fund to which the daughter had a share to be reimbursed. This decision is relevant for our present purpose. Reliance was also placed on the observations in the case of P.J. P. Thomas v. CIT MANU/WB/0255/1961 : [1962] 44 ITR 897 (Cal.), where it was held that though marriage might be a good and valuable consideration for transfer of property to a lady who agreed to marry the transferor, since it was not possible to determine the adequacy of such consideration, the marriage could not be regarded as an adequate consideration within the meaning of section 16(3)(a)(iii) of the Indian Income-tax Act 1922. These observations, in our opinion, were made entirely in a different context and have no relevance to the present case. 15. Similarly, our attention was drawn to the observations of the Supreme Court in the case of CGT v. N. S. Getti Chettiar MANU/SC/0249/1971 : [1971] 82 ITR 599, where it was held that partition of a property would not amount to a gift. Learned advocate for the revenue is absolutely right. But in this case there was no question of partition and the principle behind that decision of the Supreme Court was as to what a co-sharer was getting in lieu of his share and there was no question of any transfer by anybody to anybody, else. That principle, in our opinion, would be against the contentions of the revenue. Reliance was also placed on certain observations in the case of M. S. M. Ratnaswami Nadar v. CIT MANU/TN/0332/1973 : [1975] 100 ITR 669. There also the Madras High Court was dealing with the adequacy of the consideration under section 64(iii) of the Income-tax Act, 1961, which was similar to section 16(3)(a)(iv) of the Indian Income-tax Act, 1922. We are not concerned with the said controversy in the instant case. Reliance was also placed on certain observations in the case of CGT V. Chandrasekhara Reddy MANU/AP/0174/1976 : [1976] 105 ITR 849, where the Andhra Pradesh High Court observed that a gift by a father or mother or other guardian in discharge of a moral obligation would not attract the provisions of the Gift-tax Act. 16. Learned advocate for the assessee also drew our attention to the observations in the case of CGT v. RM. S. Ramanalhan Ckettiar MANU/TN/0292/1969 : [1969] 74 ITR 758 (Mad.), where it was held that the expression "money's worth" in section 2(xii) of the Gift-tax Act, 1958, had a wide connotation and was not necessarily to be understood in the strict context of money in specie but that which would eventually or in the ultimate analysis or result be reduced to or converted into money. There, in a partial partition of the family, provision was made for the payment of an amount to the wife of the karta. It was held that such consideration was money's worth and the payment was not a gift. As we have held, being an unmarried daughter of the Hindu family, the daughter has a right to be married out of the joint family expenses, there cannot be any gift. This only strengthens that conclusion and this conclusion is also corroborated by the Madras High Court in the case of Alagamm'ai Achi v. Veerappa Chettiar, AIR 1956 Mad 428. 17. In the aforesaid view of the matter, we are of the opinion that the Tribunal was right in its conclusion that the provisions of section 2(xii) were not attracted and the question must, therefore, be answered in the affirmative and in favour of the assessee. In the facts and circumstances of the case, there will be no order as to costs. Sudhindra Mohan Guha, J. I agree.
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Manupatra Information Solutions Pvt. Ltd.
MANU/MH/0251/1923 Equivalent Citation: AIR1923Bom304, 76Ind. Cas.555 IN THE HIGH COURT OF BOMBAY Decided On: 19.01.1923 Appellants: Parbhubhai Morar Vs. Respondent: Bai Lalita and Ors. Hon'ble Judges/Coram: Norman Macleod, C.J. and Crump, J. Subject: Contract Catch Words Mentioned IN Acts/Rules/Orders: Indian Contract Act, 1872 - Section 68 Case Note: Minor - Contract by guardian--Minor, whether bound. JUDGMENT 1. The plaintiff brought this suit against three defendants to recover Rs. 950 being the amount of principal due on a promissory-note dated the 30th November 1921. Admittedly, defendants Nos. 2 and 3 are minors and did not, and could not, make themselves liable on the promissory-note, although as a matter of fact the 2nd defendant signed for his sister. The promissory-note recites that the minor's father Keshavram Parbhuram had taken Rs. 200 and their mother had taken Rs. 300 to institute a suit in a Court. At the date of the note Rs. 627 1/2 were due on those loans. On the day of the note Bai Lalita had taken Rs. 300 to engage another Pleader. The promissory-note was signed for the total Rs. 927 1/2. Then follow the words: "I had to take these rupees because I conduct a suit in the Court as the guardian of minors named Thakordas and Shankarlal, and I shall pay you the rupees of this promissory-note with interest at one per cent. per mensem whenever you will demand the same." 2. The suit was decreed against the 1st defendant, but dismissed against defendants Nos. 2 and 3. Avery large number of cases were cited, and we have been referred to various decisions here, but the first point to note is that Lalita was not the natural guardian of the minors. She was only the next friend to conduct the suit on behalf of the minors, and, even assuming that she was a de facto guardian, she does not purport in the document to bind the minors. They cannot, therefore, be personally responsible on the note, nor could Lalita as the next friend or as sister of the minors make a contract with the plaintiff which would bind the estate of the minors. 3. In Maharana Shri Ranmalsingji v. Vadilal Vakhatchand 20 B. 61 : 10 Ind. Dec. 599 it was held that a minor could not be bound personally by contracts entered into by a guardian which did not purport to charge his estate. The Court was there referring to a legal guardian. At page 70 is the following passage: ''While holding, however, that a minor cannot be bound personally by contracts entered into by a guardian which do not purport to charge his estate, we do not think it follows that he is necessarily exempt from liability. If the debts were incurred for necessaries, he would, we believe, be bound to pay them on the general principle embodied in Section 68 of the Contract Act, as his
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liability would not probably be affected by the fact that the loans were advanced at the instance of the guardian. Her contract on his behalf might be ineffectual like one entered into by himself, but the liability to discharge debts incurred for necessaries would remain. The necessity for them would determine whether or not he was bound to repay them, and not, we think, the reasonable belief of the lender that they were for necessary purposes." 4. The questions, therefore, which would arise between the plaintiff and the minors in a suit for money advanced for necessary purposes would be entirely different to those that would arise in a suit on a promissory-note. In a recent case of Vithalrao Sheshgirirao Moktesar v. Vithalrdo Sondekar 72 Ind. Cas. 242 : 25 Bom. L.R. 151 : A.I.R. (1923) (B.) 244 which was a suit against the members of a joint family on a promissory-note signed by one of them, we said: "The real point is whether a suit which is primarily a suit on a promissory-note and, therefore, a suit to which particular rules of procedure apply, could also be treated as a suit for the debt for which the promissory-note was passed. If that were permissible difficulties would arise, because the issues in a suit on a promissory-note would be entirely different from the issues which would be raised in a suit against the whole family to recover a debt. I think an application should have been made in the first instance for amendment of the pleadings when the point was taken that only the party signing the note could be liable in a suit based on the note itself." 5. We think, therefore, that questions which would orderly arise in a suit against the minors to recover moneys which they might be liable to pay as a debt incurred by their father or by their mother or sister for necessary purposes cannot be decided in this suit, although it will be open to the plaintiff to proceed against the minors in a suit properly framed. Nothing has been decided in the present suit with regard to their liability to satisfy such a demand. 6. The Rule will be discharged with costs. The first defendant appeared, but there was no necessity for her to appear as there was no doubt about her liability. One set of costs. Manupatra Information Solutions Pvt. Ltd.
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Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Section 2(a) of the Contract Act provides as follows :

At p. 324 his Lordship says :

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Halsbury in Volume XVII, page 604, paragraph 1301, states as follows :

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

At p. 1040 Taraporewala J. says :

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy

Manupatra - Your Guide to Indian Law and Business and Policy