Baijnath Prasad and Others vs Binda Prasad Singh and Others

Fazl Ali, J.—These appeals arise out of two suits instituted by the plaintiffs to recover from the defendants, who constitute a Hindu joint family, their dues under a mortgage bond dated 17th August 1913 and four hundis dated 26th October 1930. The mortgage bond as well as the hundis were executed by a deceased member of the defendants'' family, namely Jang Bahadur who had been given a general power of attorney by all the adult members of the family, about six in number, and who according to the plaintiffs was to all intents and purposes the karta of the family. By this bond (which is the subject-matter of mortgage suit No. 48 of 1933) Jang Bahadur mortgaged certain joint family properties to secure a loan of Rs. 10,000 and agreed to pay compound interest at the rate of Kupees 15 per cent, per annum with annual rests. The hundis (which form the subject-matter of the second suit--Money Suit No. 3 of 1934) had been drawn by him for a sum of Rs. 16,100 to replace three other hundis for Rs. 12,000 which according to the plaintiffs had been signed by Jang Bahadur on 2nd August 1927 to satisfy certain dues other than the dues under the mortgage bond. Both the suits were tried together as the parties were-common and the main defence put forward on behalf of the defendants in them was that Jang Bahadur was not the karta of the family and neither the mortgage bond nor the hundis were binding on the defendants,, inasmuch as there was no legal necessity for the debts contracted by means of these documents. In the mortgage suit the defendants raised two further pleas, viz. (1) that the rate of interest provided in the mortgage bond was exorbitant and it was not at all necessary for Jang Bahadur to contract a loan at that rate and (2) that the debts for which Jang Bahadur is alleged by the plaintiffs to have given the first hundis in 1927 had been paid off prior to that date and these hundis had in fact been drawn in part payment of the dues under the mortgage bond dated 17th August 1913. In support of the last plea the defendants rely on an. endorsement in the mortgage bond itself and it is contended on their behalf that the account given by the plaintiffs in the plaint is incorrect, inasmuch as no credit has been given for the sum of Rs. 12,000 for which the hundis had been drawn by Jang Bahadur on 2nd August 1927. The defendants raised various other pleas in the Court below but none of them was pressed during the hearing of the appeals in this Court.

In dealing with the appeal in the mortgage suit it will be convenient at this stage to dispose of the defendants'' criticism of the account put forward by the plaintiffs in respect of the dues under the mortgage-bond. It appears that Jang Bahadur had made certain payments from time to time in connexion with the debt due under the mortgage bond and these payments had been duly endorsed on the back of the bond. The aggregate of the payments which were made before 22nd August 1927 came to Rupees-12,000 and after going through the accounts in presence of Jang Bahadur Baijnath, Prasad, one of the plaintiffs, made the following note on the back of the bond:

The principal and interest in respect of the bond comes to Rs. 34,480-4-0 on adjustment of account,, out of which Rs. 2430-4-0 is remitted; Rs. 12,000 received formerly stands credited as above, the balance Rs. 10,000 has been received today, on account of interest, so there remains due up to this date the balance Rs. 10,000 (rupees ten thousand), on which interest will run according to the terms of the bond, the interest and compound interest from this day will run according to the terms in the bond, etc.

A similar note was made by Jang Bahadur on the bond which runs as follows:

On calculating interest and compound interest, on setting off the amounts credited above and on paying Rs. 10,000 in cash this day, we paid in full the interest and compound interest up to this date. Now Rs. 10,000 principal, remained due by us, upon which interest and compound interest will run from today in accordance with the stipulations made in the bond.

These endorsements plainly mean that on 22nd August 1927 a sum of Rs. 10,000 only was found to be due to the plaintiffs under the mortgage bond but this is not what the figures upon which the account is based show. These figures show that out of an aggregate sum of Rs. 34,430-4-0, Rupees 2430-4-0 was remitted and Rs. 10,000 was paid by Jang Bahadur. This leaves a balance of Rs. 22,000 and not Rs. 10,000. The defendants'' explanation of the discrepancy is that on the very date which the endorsements bear Jang Bahadur had paid off Rs. 1-2,000 by drawing three hundis for that sum in favour of the plaintiffs which were accepted by Janki Singh, the senior, most member of the defendants'' family and thus the debt due under the mortgage bond was reduced to Rs. 10,000. The plaintiffs'' case on the other hand is that the hundis had been drawn by Jang Bahadur to pay off an entirely separate debt (to which I shall have to advert presently) and that by oversight the sum of Rs. 12,000 which had been paid before 22nd August 1927 and which had been already taken into consideration in arriving at the total figure of Rs. 34,430-4-0 was deducted once more from that sum. Their case in short is that on 22nd August 1927 the defendants owed to them Rs. 22,000 and not Rs. 10,000 and the statement in the endorsement that they owed Rs. 10,000 is a mistake.

Now prima facie it seems difficult to believe that the plaintiffs who are moneylenders by profession would commit such a palpable error in adding up the account but after hearing the arguments addressed to us on behalf of the parties I am not on the whole inclined to disagree with the learned Subordinate Judge who seems to have devoted considerable attention to this part of the case. It is both parties'' case that the sum of Rs. 34,430-4-0 found due to the plaintiffs as a result of the accounting between the parties had been arrived at after giving credit to the defendants for the sum of Rs. 12,000 which had been paid before 2nd August 1927 by several instalments but in the endorsements made by Baijnath on that date it is stated that:

Rupees 12,000 received formerly stands credited as above and the balance Rupees 10,000 has been received today.

se words do lend some support to the case of the plaintiffs that the sum of Rs. 12,000 was calculated twice over and their case is further strengthened by the fact that there is no reference to the hundia in the endorsement nor is it stated that in addition to the sum of Rs. 10,000 paid in cash on 2nd August 1927 a further sum of Rs. 12,000 had been paid to the plaintiffs on that date. What is of still greater importance is that such evidence as there is on the record strongly points to the conclusion that the hundis of 2nd August 1927 had been drawn by Jang Bahadur to pay off debts other than the debt due under the mortgage bond; It will be convenient at this stage to refer to the nature of those debts.

It appears that Jang Bahadur used to manage on behalf of the plaintiffs two villages named Manikpur which the plaintiffs had purchased from its previous proprietor in 1913 and village Saksora of which they are ijardars. The plaintiffs'' case is that on going through the accounts it was found that a sum of Rs. 8691 was due to the plaintiffs from Jang Bahadur out of the total collections made by him in these two villages and the defendants further owed to the plaintiffs a sum of Rs. 6370 as rent for two other villages which were held by them in Thika under the plaintiffs through Jang Bahadur. The defendant further owed a sum of Rs. 4000 which was the price of an elephant and a horse both of which had been purchased by Jang Bahadur from the plaintiffs. From the total of these three sums of money and a sum of Rs. 859 charged as interest there had to ba deducted various sums which had been previously paid by Jang Bahadur and this left a balance of Rs. 12,000 for which Jang Bahadur drew in favour of the plaintiffs three hundis which were accepted by Janki Singh, the senior most member of the defendants'' family. These facts are fully supported by a number of entries in the plaintiffs'' account books and although some attempt was made on behalf of the defendants to show that certain entries in the account books were not reliable the defendants entirely failed to substantiate their case. If therefore the plaintiffs'' account books are accepted as they must be in the present state of the evidence the defendants'' case that the hundis had been drawn by Jang Bahadur to pay off a portion of the debt due under the mortgage bond must fail. It may be stated here that defendants 1 and 2 have admitted in paragraph 8 of their written statement that the total dues of the plaintiffs including the price of an elephant and a pony and what is described as tahwil or collection money amounted to a little over Rupees 23,000; but their case is that the whole of this amount was paid off by them before 2nd August 1927. They have however produced no reliable evidence to support their statement.

The next point to be decided in the mortgage suit is whether the mortgage by Jang Bahadur is binding upon the entire joint family of the defendants. Now, there appears to have been some controversy before the learned Subordinate Judge as to whether Jang Bahadur was or was not the karta of the family in the strict sense of the term. But from the clear and exhaustive summary to be found in the judgment of the learned Subordinate Judge of the evidence on the point, the only conclusion which can be reasonably drawn is that Jang Bahadur, though he was not the senior most member of the family, was in fact its karta and was allowed to act in that capacity by all the major members of the family. Thus, the real question to be determined is whether the mortgage transaction concluded by Jang Bahadur can be justified on the ground of legal necessity or benefit to the joint family to which he belonged. Now it is recited in the mortgage bond that out of the total sum of Rs. 10,000 borrowed by Jang Bahadur a sum of Rs. 600 was required to meet certain expenses in connexion with the marriage of a female member of the family and the defendants do not dispute that so far as this item is concerned the borrowing was justified. The dispute really centers round the rest of the money which was required to purchase a proprietary interest in village Sirsi known as the patti of Raja Babu. It appears that in village Sirsi there are two other pattis known as the patti of Nandkishore and the patti of Mahkumar.

The defendants have admittedly spent a considerable sum of money in purchasing the patti of Nandkishore and an eight annas share in the patti of Mahkumar. The patti of Raja Babu was also purchased through Jang Bahadur for a sum of Rs. 34,000 out of which Rs. 9500 was raised by means of the present mortgage bond and Rs. 15,000 by means of another mortgage bond in favour of the vendor of the property in question who had been persuaded to charge interest at the very low rate of six per cent, per annum. The remaining Rs. 9000 apparently came from the joint family savings. Now from the evidence of one of the defendants himself (Narendra Narayan Singh, defendant 6) it appears that all the adult members of the family (who were seven in number) not only approved of this transaction but were of the opinion that "the family would be a great loser if they did not purchase the property." This witness had further made the following statement on the subject:

For three months before we purchased the property several members of the family stayed at Barh for humouring Raja Babu (the vendor of the property) and his mokhtaram Ghasita Lal to sell that property to us.... We were anxious to purchase that property at any cost...and we never repented the purchase of that property.

These statements are sufficient to show that not only Jang Bahadur but all the adult members of the defendants'' family regarded the transaction as highly beneficial to the family. The learned Subordinate Judge has also after reviewing the evidence at great length shown that the income of the property was sufficient to leave a profit of about Rs. 600 to the family after paying interest on the sums borrowed by Jang Bahadur for purchasing the property in question. This conclusion is, to some extent, supported by the admission of Narendra Narayan Singh, defendant 6, who has stated that the patti of Raja Babu was in thika with the defendants'' family and after paying the thika rent the defendants'' family made an annual profit of Rs. 300. Further the evidence of" Nanhu Mahto (P.W. 3) who worked as a patwari in this village under Jang Bahadur shows that the defendants possessed 100 to 125 bighas of raiyati kasht land in Raja Babu''s patti most of which was held by them at a bhaoli rent which they saved by becoming proprietors of the estate. It would seem therefore that the transaction for which the money was raised by Jang Bahadur was rightly regarded as a profitable one by the major members of the defendants'' family.

It is, however, strongly contended on behalf of the defendants that even if it is assumed that the transaction was expected to bring some profit to the family, it cannot be upheld, because under the Hindu law the manager or karta of a joint Hindu family, which includes some minor members also, has no authority to encumber the whole or any portion of the joint property of the family in order to raise money to purchase fresh property. This contention is supported by a number of authorities and I propose to deal with it at some length. The most authoritative pronouncement on the subject is to be ''found in the judgment of the Judicial Committee of the Privy Council in, the famous case in Hunooman Persaud Panday v. Mt. Bahooee Munraj Koonweree (1854) 6 M.I.A. 393. In that case their Lordship said:

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 a ease 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 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.... Their Lordships think that the lender is bound to inquire into the necessities for the loan, and 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 the circumstances, he is bound to see to the application of the money.

The rule laid down in this passage has been constantly applied to alienations by shebaits, heads of maths as well as managers of joint Hindu families and it is conceded by both the parties that this authority must govern the decision of the present case also. The important point however to be decided is how the expression "benefit to the estate" used in this authority is to be construed. On this point there are numerous decisions which may be broadly divided under two heads. On the one hand there is a line of authorities which lay down that the benefit contemplated by their Lordships of the Privy Council was benefit of a defensive nature calculated to protect the estate from some possible or threatened danger or destruction: see Hurry Mohun v. Ganesh Chunder (1884) 10 Cal. 823 . Bhagawan Das v. Mahadeo A.I.R (1923) All. 289 . Shankar Sahi and Others Vs. Baichu Ram and Others . Inspector Singh and Another Vs. Kharak Singh and Others and Ragho v. Zaga A.I.R (1929) Bom 251 . On the other hand it has been held in a number of cases that transactions justifiable on the principle of benefit to the estate are not limited to those transactions which are of a defensive nature but must be proved to be such as a prudent owner would have carried out in the interest of the family with the knowledge available to him at the time: see Jagat Narain and Another Vs. Mathura Das and Others . Tula Ram and Others Vs. Tulshi Ram and Others, . Mahabir Prasad v. Amla Prasad A.I.R (1924) All. 379. Nagindas v. Mahomed Yusuf A.I.R (1922). Bom 122 . Jado Singh and Others Vs. Natthu Singh and Others . Beni Madho v. Chander Prasad A.I.R (1925) . Pat. 189 and Jan Mahomed v. Bikoo Mahto A.I.R (1929) Pat. 130. The conflict between these two views seems to have been greatly accentuated since the pronouncement of the Judicial Committee in Palaniappa Chetty v. Devasikamony Pandara Sannadhi A.I.R (1917) P.C. 33 in which while dealing with an alienation by a mahant of debuttar land which is governed by the same principle as an alienation by the manager of a Hindu joint family their Lordships observed as follows:

No indication is to be found in any of them (the cases cited before their Lordships) as to what is in this connexion the precise nature of the things to be included under the description ''benefit to the estate''. It is impossible, their Lordships think, to give a precise definition of it applicable to all cases, and they do not attempt to do so. The preservation...the defence against hostile litigation affecting it, the protection of it or portions from injury or deterioration by inundation, these and such like things would obviously be benefits. The difficulty is to draw the line as to what are, in this connexion, to be taken as benefits and what not.

It has been pointed out in some cases that there is nothing in these observations to encourage the notion that any adventurous or speculative transaction which might probably bring profit to the estate could properly be regarded as beneficial to the estate but rather they import that any act for which the benefit to the estate can reasonably be claimed must necessarily be a defensive act undertaken for the protection of the estate already'' in possession of the family. The view expressed above has also in some cases been supported by a reference to the 28th and 29th Verses in Chap. 1 of the Mitakshara which deal with the power of a father to alienate ancestral property without the consent of his sons. The 28th Verse which contains the text of Brihaspati runs as follows:

Even a single individual may conclude a donation, mortgage, or sale of immovable property, during a season of distress, for the sake of the family, and especially for pious purposes.

The text is explained in Verse 29 as follows:

The meaning of that text is this: while the sons and grandsons are minors and incapable of giving their consent to a gift and the like or while brothers are so and continue unseparated, even one person who is capable may conclude a gift, hypothecation, or sale of immovable property, if a calamity affecting the whole family require it, or the support of the family render it necessary or indispensable duties, such as the obsequies of the father or the like make it unavoidable.

Now as pointed out by Patkar J. in Ragho v. Zaga A.I.R (1929) Bom 251 the explanation of the text of Brihaspati by Mitakshara in Verse 29 is by no means to be considered as exhaustive and may be treated as illustrative. I venture to suggest that the same remarks apply to the passage which I have quoted from the judgment of the Judicial Committee in Palaniappa Chetty v. Devasikamony Pandara Sannadhi A.I.R (1917) P.C. 33. In that passage their Lordships simply enumerated certain obvious cases of "benefit to the estate," but the very fact that they took care to emphasize that it was impossible to give a precise definition of that expression applicable to all cases, and that it was difficult "to draw the line as to what are benefits and what not," clearly indicates that they did not intend to lay down any exhaustive rule on the subject. On the other hand, in Humooman Persaud Panday v. Mt. Babooee Munraj Koonweree (1854) 6 M.I.A. 393 they draw a distinction between a case of ''need'' and one of'' ''benefit to the estate" and also between "a danger to be averted from the estate" and "the benefit to be conferred upon it" which shows that necessity and benefit are two separate tests and not merely two different expressions conveying necessarily the same meaning. It is no doubt true that where there is a pressure on the estate or it is threatened with danger and the pressure or the danger, as the case may be, is removed, the estate is necessarily benefited thereby; but it does not follow that every case of benefit must also be a case of necessity or protection of the estate from danger. In my opinion the proper way to investigate the matter is not to attach too much importance to mere verbal expressions used either in the texts or in the judgments of the Privy Council but to extract the true principle from them.

Now, the karta of the family being merely a manager and not an absolute owner, the Hindu law has like other systems of law placed certain limitations upon his power to alienate property of which he is not the absolute owner. It appears to me however that the Hindu law givers could not have intended to impose any such restriction on his power as would virtually disqualify him from doing anything to improve the condition of the family. This is evident from the comprehensive expression "for the sake of the family" or "for the purposes of the family" used in the old text of which the expression "benefit to the family" is the modern translation. I think therefore that the only reasonable limitation which can be imposed on the karta is that he must act with prudence, and prudence implies caution as well as foresight and excludes hasty, reckless and arbitrary conduct. The manager will thus not be allowed to enter into any transaction which may be speculative or fraught with risks or which may involve a possibility of loss to the family and the Courts will not encourage him either to part with the joint family property or to encumber it merely in order to increase the immediate income of the property, because a prudent person will not sacrifice a certain and stable income in favour of the mere prospect of a better income. There are however reported cases in which in certain peculiar circumstances the alienation of a part of the joint family property by a karta for the acquisition of new property has been upheld: see Beni Madho Singh Vs. Chander Prasad Singh, Jan Mahomed v. Bikoo Mahto A.I.R (1929) Pat 130 and Jado Singh and Others Vs. Natthu Singh and Others . Now as I have already stated the peculiar feature of the present case is that no less than seven adult members of the defendant''s family with the knowledge available [to them and possessing all the necessary ''information about the means and the requirements of the family were convinced ''that the proposed purchase of the new ''property was for the benefit of the estate land so far as the materials on the record !go, they show that they were not guided by merely sentimental considerations, but [acted as a prudent owner would have acted in the circumstances of the case. Indeed it as not been has when to us that the property which was mortgaged in this case was of any particular utility to the family; on the other hand, there is evidence on the record to show that in village Smirk the defendants had acquired certain other proprietary interests and the consolidation of these interests had the effect of converting them from mere tenants, who had to pay a heavy rent to the landlord, into landlords, which fact by itself was of great advantage to the family. Besides, having regard to the attitude of all the adult members of the family then living, it cannot be said that the plaintiffs when they advanced the loan did not act honestly or that they had not good reason to be satisfied that Jang Bahadur was acting in this particular instance for the benefit of the estate. On the whole therefore I am inclined to think that the learned Subordinate Judge was right in upholding the transaction.

The only other point which arises in the mortgage suit is whether the high rate of interest at which the money was borrowed was justified in the circumstances of the case. The learned Subordinate Judge has answered the point in favour of the defendants and he has given the plaintiffs a decree only for Rs. 7000 odd which sum was arrived at by calculating simple and not compound interest on the principal sum at the rate of Rs. 15 per cent, per annum. Now it appears that the defendants have already paid a sum of about Rs. 22,000 to the plaintiffs and that if the rate of interest mentioned in the bond is applied throughout they would be entitled to a further sum of Rs. 49,000 odd at the date of the suit. These being the circumstances of the case there was no real controversy between the parties that the defendants were entitled to some relief. The parties were also agreed that there is nothing per se wrong or improper about compound interest being claimed by a creditor, especially when the debtor does not pay interest from year to year or at such periods when the interest is payable. The real dispute between the parties was confined to the rate of interest to be charged in the circumstances of the case. Having, however, given careful consideration to the arguments addressed to us on the subject, we have come to the conclusion that the decision of the learned Subordinate Judge, which was based not only upon the evidence adduced before him but upon his knowledge of the local conditions, should be upheld.

The only point which remains to be considered is one which arises in the money suit based upon the hundid and it is whether the entire joint family is liable for the debts contracted by means of these hundis. The first question to be considered is whether the debt for the payment of which these hundis were executed was a joint family debt. The arguments on this subject were confined to two items only (1) an item of Rs. 4000 which is said to represent the price of an elephant and a horse supplied by the plaintiffs to Jang Bahadur and (2) an item of Rs. 8691 which represents the amount due by Jang Bahadur on account of the collections or as it is called tawhil of two villages Manikpura and Sakora of which he was in charge on behalf of the plaintiffs. Prima facie there seems to be considerable force in the argument advanced before us on behalf of the defendants that these amounts cannot be regarded as legal necessity. But here again the question has to be decided with reference to the peculiar circumstances of the case. Upon the evidence on the record there can be no doubt that these debts were regarded as legitimate debts not only by Jang Bahadur but by all the adult. members of the family and when Jang Bahadur executed the hundi, he executed it with the concurrence of all the adult members. There was no dispute before us that at least three members of the family, namely Jang Bahadur himself, his son Binda and Janki Singh, who was according to the case of the defendants themselves the senior-most member and karta, were present when the accounts were gone into and they accepted the accounts. It appears also that though the hundi was drawn by Jang Bahadur, it was accepted by Janki himself. The circumstances of the case thus strongly suggest that the tawhil money for which the hundis were executed must have been spent on the legitimate needs of the family though naturally owing to lapse of time and because the defendants are not willing to disclose the true facts the evidence as to how the money was actually spent is not available. As to the price of the elephant and the horse, it is contended that they are more in the nature of a luxury than necessity but in determining the question one cannot ignore the circumstances under which the family was placed and the fact that the elephant and the horse were in use of the entire family and regarded as the common property. This is virtually conceded in the evidence of one of the defendants himself. Besides, if the view, which seems to me to be fully justified by the evidence and the probabilities of the case, is correct that the debts covered by the hundis had been virtually contracted by all the adult members of the family through Jang Bahadur, all the defendants must necessarily be liable to pay the debts, because they are sons or grandsons of one or the other of the adult members.

The question which still remains to be considered is whether in those cases where the manager of a joint family borrows money on a hundi or promissory note to meet a joint family necessity the other members of the family may be sued on the hundi or promissory note. The question has arisen in many cases in connexion with a promissory note, but as both a promissory note and a hundi are negotiable instruments, it is clear that the answer must be the same in each case. It appears that before the decision of the Judicial Committee in Sadasukh Janki Das v. Kishan Pershad A.I.R (1918) P.C. 146 the view which prevailed in several High Courts was that all the members of a joint family were liable to be sued on a promissory note executed by the manager of the family alone, provided that it was established that the money was borrowed on the promissory note for joint family purposes : see Krishna Ayyar v. Krishnasami Ayyar (1900) 23 Mad. 597. Nagendra Chandra Dey v. Amar Chandra Kundu (1903) 7 C.W.N. 725 and Baisnab Chandra De v. Ramdhon Dhor 11 C.W.N. 139. Since that decision however there has arisen a conflict of opinion among the High Courts with the result that while in some cases the view expressed in older cases has been adhered to: see Krishnanand Nath Khare Vs. Raja Ram Singh, . Bhagwan Singh & Co. v. Bakshi Ram A.I.R (1933) Lah. 494 and Tikan Chand Chaudhury Vs. Sudarsan Trigunait and Others, in others it has been held that the manager of a joint family cannot by executing a promissory note in his own name bind the other members of the family, no other names appearing on the document as those to be charged: see Sreelal Manglulal Vs. Lister Antiseptic Dressing Co. Ltd., . Hari Mohan Ghose Vs. Sourendra Nath Mitter and Others, . Thaith Ottathil Kutte Ammu Vs. Purushotam Doss Raggi Seth, . Birkeshwar Raut v. Ram Lochan Pandey A.I.R (1934) Pat. 629 . Sirikant Lal and Another Vs. Sidheswari Prasad Narain Singh and Another, . I had the occasion to deal with the matter at some length but out of deference to the decision of a Division Bench of this Court in Thaith Ottathil Kutte Ammu Vs. Purushotam Doss Raggi Seth, . I preferred to rest my judgment in that case on another point which was quite sufficient for the purpose. As however the question is an important one and it has been raised repeatedly in this Court as well as in other High Courts, it appears to me to be necessary to decide it in the present case.

Sadasukh Janki Das v. Kishan Pershad A.I.R (1918) P.C. 146 their Lordships of the Judicial Committee had to deal with a case? in which the chief question to be decided, was whether on certain hundis executed by a certain person without disclosing that he was acting as an agent for another person he could be heard to say that he had executed the hundis not on his own behalf but on behalf of an undisclosed principal. Their Lordships of the Judicial Committee decided that the plea was not available to him and observed as follows:

It is not sufficient that the principal''s name should be "in some way" disclosed, it must be disclosed in such a way that on any lair interpretation o� the instrument his name is the real name of the person liable upon the bills. Their Lordships'' attention was directed to Sections 26, 27 and 28, Negotiable Instruments Act of 1884, and the terms of these Sections were contrasted with the corresponding provisions of the English Statute. It is unnecessary in this connexion to decide whether their effect is identical. It is sufficient to say that these Sections contain nothing inconsistent with the principles already enunciated, and nothing to support the contention, which is contrary to all established rules that in an action on a bill of exchange or promissory note against a person whose name properly appears as party to the instrument, it is open either by way of claim or defence to show that the signatory was in reality acting for an undisclosed principal.

Now, there can be no doubt that if the manager of a joint family acted merely as an agent for the other members, the principle laid down by the Judicial Committee would be fully applicable to a hundi or a promissory note executed by him; but as I ventured to point out in Sirikant Lal and Another Vs. Sidheswari Prasad Narain Singh and Another, the Hindu joint family is an institution peculiar to this country and Hindu law gives its karta the power to contract loans to meet a family necessity or for the benefit of the family according to his own discretion and without any express authority from the other members of the family. A managing member cannot thus be regarded as a mere agent for the family, because he is himself a member of the family and having regard to the powers which vest in him under the Hindu law, he may well be regarded as the principal. At any rate as was pointed out in Krishnanand Nath Khare Vs. Raja Ram Singh, a joint Hindu family being a legal person according to Hindu law may be represented and may act through the managing member or the head thereof. Thus, in my opinion, the decision in Sadasukh Janki Das v. Kishan Pershad A.I.R (1918). P.C. 146 could not have the effect of overruling the earlier decision which propounded the view that if money was borrowed on a promissory note by a manager for the benefit or necessity of the joint family, the other members of the family in a suit on the promissory note would be liable. The matter which is now before us seems to have been very lucidly dealt with by Shephard J. in Krishna Ayyar v. Krishnasami Ayyar (1900) 23 Mad. 597 in the following passage:

At Common law, a married woman and her husband were both liable on her contracts entered into before marriage and the liability of the husband was in no way dependent on or limited by the existence of property derived by him from his wife. If, before marriage, she made a promissory note, an action could be brought against her husband and her : see form in Bullen and Leake''s ''Pleadings'', Edn. 3; Byles on ''Bills'', p. 74, citing Mitchinson v. Hewson (1797) 7 T.R. 348. The Married Woman''s Property Act, 1882, altered the law by limiting the liability, of the husband to the value of his wife''s property acquired by him. There is in this case no joint liability, nor is the liability of the husband that of a, surety, but it resembles it, inasmuch as any defence'' which would be open to the debtor would equally be open to him: Beck v. Pierce (1890) 23 Q.B.D. 316. It appears to me that these observations apply equally to the present case or to that of a Hindu father whose son is joined in an action for debt brought against, them. If it is consistent with the English rule of law relating to bills of exchange that the husband-may be joined in an action against his wife, it is no less consistent with the law of this country that a member of a Hindu family should be joined in an action against the manager on a promissory note made by him. In the one case, as in the other, there is a liability which is, so to speak, external to the obligation arising on the making of the promissory note, and in both cases that liability is limited, while the liability of the maker is absolute.

It seems obvious that if a person suing on a promissory note executed by a Hindu father impleads not only the father but also the son as a defendant on the doctrine of the Hindu law that a son is under a. pious obligation to pay his father''s debt, a, Court may pass a decree not only against the father but also against the son. I think that the same rule would have applied, if there had been an express enactment to the effect that in all suits where the manager of a Hindu joint family is sued on debts contracted for family necessity all the members of the joint family would be liable and no exception was made in that enactment with regard to suits based on negotiable instruments. If it is so, I do not see how the position is altered, if the rule enunciated above, though not subject of an express enactment is part of the law of the country. As I have pointed out on an earlier occasion, Hindu law does not recognize any distinction between the liability of the joint family when the debt is contracted by its karta under a promissory: note or a bill of exchange and its liability when the debt is contracted otherwise. Under that law all that is necessary to make all the members of the family liable is that the debt should have been contracted for family necessity or for the benefit of the family. Where therefore these conditions are satisfied I do not see on what ground a Court can refuse to grant a decree against the other member of the family, unless it is compelled to do so by something, to be found in the Negotiable Instruments Act or the principles underlying it. The learned advocate appearing for the defendants read out to us various Sections of the Negotiable Instruments Act but we found nothing in any of these Sections which should preclude a Court from applying the principles of Hindu law to a suit based on negotiable instruments. The learned advocate for the defendants was further unable to show to us how the negotiability of the document or otherwise affected can be retarded, if the rule of Hindu law is applied to a suit based on such an instrument. Indeed, it would always be open to the holder of the instrument to sue the maker and the acceptor of the instrument and he need not sue all the members of the joint family, if he so chooses. He will also be entitled to avail himself fully of the benefit of the specific provision in the Negotiable Instruments Act which is to the effect that once the execution of the document is proved, consideration will be presumed. He may, however, waive the benefit of this provision and adduce direct evidence to prove the passing of consideration. Similarly, there should be nothing to prevent him if he has evidence in his possession from proving that the maker of the instrument borrowed money to meet a family necessity and I do not see why if he succeeds in proving it, the Court should refuse to apply the Hindu law on the subject, merely because the suit is based on a negotiable instrument. The matter however need not be pursued any further, because the view which I have ventured to put forward seems to me to be supported by the decision of the Judicial Committee in AIR 1934 4 (Privy Council) .

In that case an action had been brought by the plaintiff on two promissory notes executed by a person held to be the karta of a joint family and the question to be decided was whether the members of the joint family other than the karta could be made liable on them. It is obvious that if the correct legal position is that in an action based on a negotiable instrument no person other than the maker of the instrument can in any circumstances whatsoever beheld to be liable, the case might well have been disposed of by the Privy Council on that ground alone. Their Lordships however found it necessary to decide whether the particular sums for which the action was brought had been borrowed for the purpose of the joint family business and they dismissed the action against the menu bears other than the karta on the ground that the evidence was not sufficient to prove the plaintiff''s case. They also had to point out that when a promissory note is signed by the karta, there is no presumption that the borrowing was for the purpose of the joint family and the lender must prove it. In my opinion, this decision should set at rest all controversy on the subject and in this view it seems unnecessary for us to refer the matter to a larger Bench. I may state here that My Lord the Chief Justice who was a party to the decision in Birkeswar Raut Vs. Ram Lochan Pandey and Another, takes the same view of the matter.

There is one peculiar aspect of the case to which our attention has been called by the learned advocate for the plaintiffs. It appears that if the main pleas raised by the defendants in these appeals are given effect to, they will be placed in a far more unfavourable position than they are under the decree passed by the Subordinate Judge. Their main plea in the money suit is that there should be a money decree, only against the heirs of Jang Bahadur who drew the hundi and those of Janki who accepted it. It is true that if this plea is accepted, some of the properties which have been sold in execution of the decree of the Subordinate Judge and passed into the possession of the plaintiffs may have to be returned to them. On the other hand if we accept the case of the defendants that no mortgage decree in the mortgage suit can be passed, because the mortgage was not justified by legal necessity, the defendants are, as was conceded by them, faced with this position that there must be a money decree not only against the seven adult members who approved of and affirmed the mortgage transaction but also against the other defendants who are the sons and grandsons of these persons.

It is also not disputed that in that case the money decree will have to be passed not merely for the sum of Rs. 7000 for which a decree has been passed by the Subordinate Judge but for the sum of Rs. 49,000. Thus the result will be that the plaintiffs will have a decree for the large sum of Rs. 49,000 against all the defendants in the mortgage suit and the money decree passed by the Subordinate Judge will be upheld with this modification, that it will be enforceable only against the shares of the heirs of Jang Bahadur and Janki. Such a situation even the defendants cannot possibly contemplate with equanimity and their advocate frankly conceded before us that a decree in these terms will be of no use to them. In the result both the Appeals Nos. 10 and 113 as well as cross objection in Appeal No. 113 are dismissed, but, in the circumstances of the case, we would direct the parties to bear their respective costs in this Court.

It seems also unnecessary to fix a fresh period of grace, for the mortgage decree passed by the learned Subordinate Judge is upheld.

Courtney-Terrell, C.J.

I have carefully read and considered the clear and careful judgment prepared by my brother Fazl Ali. I agree entirely with his opinion on the facts and on the law and have nothing to add.