ARVIND @ ABASAHEB GANESH KULKARNI & ORS. v. ANNA @ DHANPAL PARISA CHOUGULE & ORS

Citation: [1980] 2 S.C.R. 816

Court: Supreme Court of India

Bench: N.L. UNTWALIA, O. CHINNAPPA REDDY

Case summary

When the mortgagee is himself the purchaser and when the greater portion of the consideration went in discharge of the mortgagors, we do not see how any question of enquiry regarding pressure on the esta\e would arise at all....

Judgment text

·• ARVIND @ ABASAHEB GANESH KULKARNI & ORS. v. ANNA @ DHANPAL PARISA CHOUGULE & ORS. January 22, 1980 (N. L. UNTAWALIA AND 0. CHINNAPPA REDDY, JJ. J Mortgage-Minor brothers alleged that mortgage was not for legtil necrssity and that the sale was for inadequate consideration-Elder brother discharged' family debts-Small part of consideration not accounted for-Sale-Validity of. A mortgagor executed two- deeds of n1ortgage in favour of the faU1er of the appellants for Rs. 1600 and Rs. 1000 in respect of certain lands. Both the mortgages were possessory mortgages but the land was leased back to the mortgagor for a stipulated rent. The mortgagor died leaving behind him three sons, one adult and two minors. The adult son borrowed a further sum of Rs.

131 by executing a simple mortgage and purporting to act as the ~fanager of the joint family and the guardian of his minor brothers, executed a deed of sale in favour of the father of the appellants in respect of four out of ten items of land previously mortgaged. The consideration for the sale was Rs. 3050 which was made up of Rs. 1600. Rs. 1000 and Rs. 131 due under three previous mortgages respectively and Rs. 200 received in cash on the date of sale. The minor sons on becoming major filed a suii out of which this appeal arises. for a declaration that the sale deed e. xecuted was not for legal necessity, nor for the benefit of the estate and, therefore, not binding on them. They also prayed for joint possession of their 2/3rd share. The trial conrt found that there was legal necessity for the sale to the extent of Rs. 2600 only, the consideration of Rs. 3050 for the sale was inadequate as the lands were worth about Rs.

400 and that there was no compelling pressure on the estate to justify the sa. le and therefor'e the sale was not for the benefit of the family and hence not binding on the plaintiffs. A decree was granted in r their favour for joint possession of 2/3rd share of the lands subject to certain payment to the second defendant. On appeal by the second defendant, the Assistant Judge held the suit of the first plaintiff to be barred by time and therefore modified the decree in favour of the second plaintiff. On appeal by the first plaintiff and second defendant, the High Court allowed the appent by the first plaintiff and dismissed the appeal filed by the second defendant. - Accepting the appeal of the legal representatives of the second defendant, HELD : Out of the sale consideralion of Rs. 3050 there was undoubted' legal necessity to the extent of Rs. 2600 the total amount due under the tv»o deeds of mortgage executed by the father of the plaintiffs.

Out of the ten II items which were mortgaged, only four were sold and the remaining six items were released from the burden of the mortgages. The f. amily was also relievecf from one burden of paying rent to the mortgagee· under the lease. All this. was for the benefit of the family, The value of the land svld under the deed of sale was found by the Courts below to be Rs. 4000. Even if that be so it cannot possibly be said that the price of Rs. 3000 was grossly inadequate. Further there were continuous dealings between the family of the plaint~1s and • the fan1ily of the second defendant over a long course of years. In thi! SO circumstances it is impossible to say that the sale was not binding on the plaintiffs.

The Courts below appeared to think that notwithstanding the circumstanc'e that there was legal necessity to a large extent it was incumbent on the second defendant to establish that he made enquiry to satisfy himself that there was sufficient pressure on the estate which justified the sale. When the mortgagee was himself the· purchaser and when the greater portion of the consideration went in discharge of the mor~gages no question of enquiry regarding pressure on the estate would arise at all. Where ancestral property is sold for the purpose of discharging debts incurred by the father and th& bulk of the proceeds of the sale is so accounted, the fact that a small part c of the consideration it not accounted for will not invalidate the sale. [819 A-E] Gauri Shankar & Ors. v. Jiwan Singh & Ors. A. I. R. 1927 P. C. 246 /Viamat Rai & Ors. v. Din Dayal & Ors. 1927 A·. I. R. P. C. 121, Ram Sunder Lnl & another v. Lachhmi Narain and anothet' A. I. R. 1929 P. C.

143; HanoonJan Persaud Pondey v. Mt. Babooee Munrai Koonweree [1955] 6 M. I. A. 393; Radhakrishendas and another v. Kaluram A. I. R. 1967 S. C. 574, referred to. D,... Ba/mukand v. Kam/a Wati & Or!. A. I. R. 1964 S. C. 1385 held inapplicable. CIVIL APPELATE JURISDICTION : Civil Appeal Nos. 216-217 of 1970. Appeals by special )eave from the Judgment and Order dated 3-12-1968 of the Bombay High Court in Second Appeal Nos. 1232 and 1214/1961. V. S. Desai, R. B. Datar and Lalit Bhardwaj and Naveen Sinha '- for the Appellants. S. V. Tambwaker for the Respondent. The Judgment of the Court was delivered by 11 CH! NNAPPA REDDY, J. -On April 15, 1930 Parisa Chougule, executed Exhibit 93, a deed of mortgage in favour of Ganesh, Dattotraya Kulkarni (father of the appellants) for a sum of Rs. 1600 in respect of single item of land. On August 25, 1933, Parisa Chougule executed Exhibit 92 another deed of mortgage in favour of Gthe same mortgagee for a sum of Rs.

1,000 in respect of ten ite ~ extent of Rs. 2600 only, that the value of the land was Rs. 4,006 and that there was no pressure on the estate justifying the sale. The Assistant Judge found that there was no evidence to show that the . defendant made any bonafide enquiry to satisfy himself that there. was sufficient pressure on the family justifying the sale. He how- • ever, held that the suit of the first plaintiff was liable to be dismissed as it was barred by limitation. He, therefore, modified the decree • of the Trial Court by granting a decree in favour of the second plaintiff only for possession of a one third share in the lands subject to /""payment of a sum of Rs. 866. 66 ps. to the second defendant. The first plaintiff as well as the second defendant preferred second appeals to the High Court. The High Court allowed the appeal filed by the first plaintiff and dismissed the appeal filed by the second defenilant.

fl The legal representatives of the second defendant have preferred these appeals after obtaining special leave from this Court under -f Arfclc J36 of the Constitution. It is clear that these appeals have to be allowed. The facts A narrated above show that out of the consideration of Rs. 30. 50 for the sale there was undoubted legal necessity to the extent of Rs. 2600 • the total amount due under the two deeds of mortgage executed by the father of the plaintiffs. Out of the ten items of land which were mortgaged, only four were sold and the remaining six items were B released from the burden of the mortgages. The family was also relieved from the burden of paying rent to the mortgagee under the lease deed. Surely all this was for the benefit of the family. The. value of the land sold under the deed of sale was found by the Conrts below to be Rs. 4000. Even if that be so it cannot possibly be said that the price of Rs. 3000 was grossly inadequate.

It has further to be remembered that there were continuous dealings between the family of the plaintiffs and the family of the second defendant, over a long course of years. In those circumstances it is i,mpossible to agree with the conclusion of the courts below that the sale was not binding on the plaintiffs. The conrts below appeared to think that notwithstanding the circumstance that there was legal necessity to a large extent it was incumbent on the second defendant to establish that he made enquiry to satisfy himself that there was sufficient pressure on the estate which justified the sale. We are unable to see any substance in the view taken by the courts below. When the mortgagee is himself the purchaser and when the greater portion of the consideration went in discharge of the mortgagors, we do not see how any question of enquiry regarding pressure on the esta\e would arise at all. Where ancestral property is sold for !

he purpose of discharging debts incurred by the father and the bulk of the proceeds of the • s_aJe is so accounted, the fact that a small part o_f the consideration is - not accounted for will not invalidate the sale. In Gauri Shankar & Ors. v. liwan Singh Ors. (') it was found that Rs. 500 out of the price of Rs. 4000 was not fully accounted for and that there was legal DICessity for the balance of Rs. 3500. The Privy Council held that' if the purchaser had acted honestly, if the existence of a family necessity for a sale. was made out and the price was not unreasonably low, the purchaser was not bound to account for the application of the whole of the price. The sale was upheld. In Niamat Rai and Ors. v. Din Dayal and Ors. (') the manager of a joint family sold family property for Rs. 34,500 to saisfy pre-existing debts of the extent of Rs. 38,000. It was held that it was sufficient to sustain the sale without showing how the balance had b~n applied. (! ) A. LR. 1227 P. C. 246.

(2) A. I. R. 1927 P. C. 121. In Ram Sunder Lal & Anr. v. Lachhmi Narain and Anr. (') . , ·• the vendee the sale in whose favour was questioned fourteen years after the sale, was able to prove legal necessity to the extent of Rs. 7744 out of a total price of Rs. 10,767. The Privy Council after quoting a passage from the well-known case of Hanoomanpersaud Pandey v. • Mt. Babooee Munrai Koonweree,(') upheld the sale. B The principle of these decisions has been approved by this Court in Radhak;ishandas and Anr. v. Kaluram. ('). The learned counsel for the respondents relied upon the decision of this Court in Balmukand v. Kam/a Wati & Ors. (') That was a suit for specific performance of an agreement of sale executed by the manager of the family without even consulting the other adult members of the family. The object of the sale was not to discharge any antecedent debts of the family nor was it for the purpose of securing any benefit to the family.

The only reason for the sale of the land was that the plaintiff wanted to consolidate bis own holding. The Court naturally found that there was neither legal necessity nor D benefit to the estate by the proposed sale and the agreement therefore, could not be enforced. We do not see what relevance this case has to the facts of the present case. We a~ordingly allow the appeals and dismiss the suit with cost throughout. N. K. A. Appeals allawed. • \ . ~ (1) A. I. R. 1929 P. C. 143 (2) (1955) 6 M. I. A. 393. (3) A. I. R. 1967 S. C. 574. (4) A. LR. 1964 S. C. 1385. y