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Judgment
Harries, C.J.—This is a plaintiffs'' appeal from a decree of the learned subordinate Judge of Gaya dismissing their claim arising under a security bond. The suit was brought to recover Rs. 13,500 by the sale of two villages, Rahio and Barai, mortgaged to the plaintiffs under a security bond dated 23rd September 1920. The plaintiffs were the sons of one Brahmadeo Singh in whose favour the bond was executed, and defendant 1 was the executant thereof. Defendants 2 to 4, it was said, constituted a pint Hindu family with defendant 1 as karta thereof, and it was alleged that they were bound by the terms of the bond by reason of the fact that defendant 1 had executed the same in his capacity as karta of the family. Defendants 5 to 10 were subsequent mortgagees of village Rahio and were im-pleaded as such. The other defendants were merely pro forma.
The facts of the case can be shortly stated as follows: On 24th January 1914, the plaintiffs'' father Brahmadeo Singh and two other persons, namely Amar Singh and Gaya Singh, obtained a mukarrari lease of two villages, Lakhawar Khas and Lakhawar Makhloot Faridpur alias Malpur, Lakhawar from Ram Bhuvaneshwari Kuar of Tikari. The plaintiffs'' father Brahmadeo Singh and Amar Singh had each four annas in this mukarrari lease, whilst Gaya had the remaining eight annas. Shortly after this mukarrari had been granted, defendant 14, the Raja of Tamkuhi, claimed that he was entitled to the villages in question by virtue of an earlier mukarrari said to have been executed in his favour by the Rani''s predecessor in-title. The Raja of Tamkuhi, it is said, dispossessed the later mukarraridars, and Brahmadeo Singh, Amar Singh and Gaya Singh brought a suit against the Raja of Tamkuhi claiming a declaration that they were mukarraridars of the villages in question and possession of the same.
On 25th April 1915, the suit was decreed in the Court of the subordinate Judge, and on 25th June 1919, an appeal by the Raja of Tamkuhi to this Court was dismissed. Brahmadeo Singh, Gaya Singh and Amar Singh proceeded to execute the decree of this Court and obtained delivery of possession of the two villages. The possession given was symbolical as it -was impossible to give the parties actual possession as they were only mukarraridars entitled to rents from the tenants of the villages. Costs were also recovered from the Raja, and eventually a sum was deposited in Court of which the share of the plaintiff''s father was Rs. 1018 or thereabouts. Being dissatisfied with the decision of the High Court, the Raja of Tamkuhi obtained leave to appeal to His Majesty in Council and during the pendency of that appeal the plaintiffs'' father on 23rd September 1923, sold his four annas share in the mukarrari lease together with the arrears of rent and his share of the costs deposited by the Raja to defendant 1 who, it is said, purchased as karta of his family which consisted of himself and defendants 2, 3 and 4. The consideration for this purchase was a sum of Rs. 10,000. In the sale deed, (Ex. 8), it was expressly provided that if the appeal to His Majesty in Council was decided against the vendor, the vendee would not be entitled to a refund of the purchase price.
Further, in such an event the vendee would be bound to refund to the Raja any costs and rent which he might have recovered and the vendee was given the right to be substituted in place of Brahmadeo Singh in the Privy Council appeal then pending. It was also provided that, in the event of the Raja being successful in the Privy Council appeal and recovering his costs from the plaintiffs'' father, the latter would be entitled to recover the sum from the vendee.
On the same date the security bond, (Ex. 9), now sued upon was executed by defendant 1 in favour of the plaintiff''s father to secure the payment of any amounts which might be due from him to the plaintiffs'' father in the event of the Privy Council appeal of the Raja being successful and the plaintiff''s father being compelled to pay any such amounts to the Raja. On 15th May 1923, the appeal of the Raja was allowed toy His Majesty in Council and. the Raja was held entitled to the property under a previous mukarrari lease.
It is to be observed that defendant 1 did not obtain substitution and was, therefore, not a party to the Privy Council appeal when it was decided. The Raja of Tamkuhi then proceeded to execute his decree for costs and mesne profits obtained in the Privy Council against the plaintiffs'' father, and on 5th March 1927, a sum of Rs. 6590 was recovered from the plaintiffs'' father by the sale of certain of Ms property. The plaintiffs, after the death of their father, brought the present suit to recover the sum of Rs. 6590, together with interest at the rate of Rs. 1-8-0 per cent per mensem by sale of the property hypothecated by defendant 1 by the security bond of 23rd September 1923. Defendant 1 pleaded that the sale to him of the four annas share of Brahmadeo Singh in the mukarrari lease was void as there had been a total failure of consideration.
He contended that, as it eventually transpired Brahmadeo Singh had no title to the mukarrari interest he had failed to perform his part of the transaction, and, therefore, defendant 1 was in no way bound thereby. As there was no consideration for the deed of sale, there was no consideration for the security bond which was executed to secure sums due under the void deed of sale. Defendants 2 to 4 also denied their liability and further alleged that there was no legal necessity for the transaction and, therefore, the mortgage created by the security bond was not binding on the family property and was void. Defendants 5 to 10 alleged that they were subsequent mortgagees without notice of the security bond, and as the security bond was void when executed their interest was in no way affected.
The learned subordinate Judge held that there was no consideration moving from Brahmadeo Singh to support the sale deed of 23rd September 1923, and that being so, the transaction was void and of no effect. As that transaction created no liability in defendant 1 or the members of his family, there was no consideration for the security bond and accordingly the claim under the same was dismissed in its entirety. The learned subordinate Judge also held that the security bond had not been executed for family necessity and, therefore, defendants 2 to 4 were in no way bound by it and the mortgage could never bind the family property.
The learned Judge also held that defendants 5 to 10 had constructive notice of this security bond, but such was immaterial by reason of the fact that the security bond was without consideration and therefore null and void and of no effect. In the result the plaintiffs'' claim against all the defendants was dismissed. It has been argued by Mr. Section N. Dutta on behalf of the plaintiff-appellants that the learned subordinate Judge was wrong in dismissing the claim against defendant 1 and defendants 5 to 10. Counsel had to concede that he could not establish that there was any legal necessity for defendant 1 to execute the security bond. The purchase of the interest of the plaintiffs'' father in this mukarrari was a highly speculative transaction, and it could not possibly be said that it was a transaction for the benefit of the family and such as a reasonable manager would enter into. The risks involved in this transaction were great and in the events that happened it has proved to be most disastrous to defendant 1. In the circumstances, learned Counsel for the plaintiff-appellants was right in not urging that the learned subordinate Judge was wrong in his finding that there was no legal necessity for the execution of this security bond.
It was however urged that the learned Judge was wrong in holding that there was no consideration for this sale deed and with that view I agree. What was sold was Brahmadeo Singh''s interest, if any, in the mukarrari lease granted to him and others on 24th January 1914, and it was made abundantly clear in the sale deed that this interest was subject to litigation which might terminate in favour of the Raja of Tamkuhi who claimed the property. At the time of the sale Brahmadeo Singh and his cosharers in this mukarrari had been declared to be the owners thereof by the learned subordinate Judge and by the highest Court in this province, namely the High Court, and such possession as was possible had been given to them in execution of the decree of the High Court.
Further, certain costs had been recovered from the Raja, and the parties at the time of this sale deed were entitled to obtain their shares in a sum which had been deposited by the Raja in Court to meet these costs. What Brahmadeo Singh sold to defendant 1 was not a four annas share in the mukarrari lease but all his rights under the mukarrari lease and the decree of the High Court subject always to the Raja of Tamkuhi succeeding in his appeal to the Privy Council. There was no covenant of any kind as to title; but, on the contrary, it was made quite clear that the title was in dispute and the possibility of the Baja succeeding in the Privy Council is clearly contemplated in the sale deed.
On behalf of defendant 1, it has been urged that the sale was a sale of a four annas share in the mukarrari interest and as Brahmadeo Singh had failed to transfer such interest the consideration for the sale deed had wholly failed. Counsel for defendant 1 argued that it was clear that the parties really believed that Brahmadeo Singh and his cosharers would be successful in the Privy Council, and that being so, there was something of the nature of a covenant of title in the sale deed. However as I have pointed out earlier, the subject-matter of the sale was the plaintiffs'' interest if any under the mukarrari interest and the decree of this Court subject always to the litigation that was still pending.
It was further argued on behalf of defendant 1 that what was sold, namely a four annas interest in the two villages Lakhawar Khas and Lakhawar Makh-loot Faridpur, had no existence and that there was no such property. It was urged that in the judgment of their Lordships of the Privy Council there was a finding that no such villages as Lakhawar Khas and Lakhawar Makhloot Faridpur existed and that these were merely names for portions of a village called Damodarpur Lakhapur (Lakhawar?). It is to be observed that throughout this litigation the Raja of Tamkuhi had contended that in an earlier mukarrari lease to him of a village called Damodarpur Lakhapur executed by an ancestor of the present Rani of Tikari the two villages in question in this case were included. The learned subordinate Judge and the High Court had held that the Eaja of Tamkuhi had only been given a mukarrari of Damodarpur proper and that the two villages in question in this case were not included in his grant.
Before their Lordships of the Privy Council, certain documents were admitted in evidence which had been rejected by the High Court, and in the result their Lordships held that the grant of a mukarrari interest in Damodarpur to the Raja of Tamkuhi carried with it the mukarrari interest in the two villages in dispute, namely Lakhawar Khas and Lakhwar Makhloot Faridpur.
Their Lordships did not hold that the two villages Lakhawar Khas and Lakhawar Makhloot Faridpur had no physical existence. They only held that these two villages were included in the grant of Damodarpur. It appears that the lands of these villages were intermingled and that the three had been surveyed together as a whole, and at the time of the grant to the Raja of Tamkuhi three villages were treated as one entity, hence the grant of Damodarpur was a grant of all three villages. That, however, does not mean that the two villages in dispute in this case had no physical existence whatsoever.
On the contrary, it is to be observed that the areas of these villages were known and in fact in a later stage of this litigation the Raja of Tamkuhi was given a decree by this Court for mesne profits in respect of the two villages. For these reasons it cannot be said that the deed of sale was void by reason of the fact that the two villages of which Brahmadeo Singh had a share in the mukarrari interest had no existence and, therefore, the sale was without consideration. These villages did exist and prior to the sale to defendant 1 possession thereof had been granted to Brahmadeo Singh, Amar Singh and Gaya Singh, and such possession could in no sense be regarded as wrongful even though the decree of the High Court was later reversed by His Majesty in Council: Dakshina Mohun Roy v. Saroda Mohun Roy (94) 21 Cal. 142. In my judgment at the date of the sale, namely, 23rd September 1923, Brahmadeo Singh and his cosharers were in rightful possession of this property under the decree of the High Court.
Defendant 1 bought whatever interest Brahmadeo Singh had in this property with his eyes open, and no deception of any kind was practised on him. He bought expressly subject to the litigation and was well aware of the risks. It was suggested that the sale deed makes it clear that Brahmadeo Singh and his cosharers were in actual possession of this mukarrari interest before the litigation commenced and were again given actual possession after the decree of the High Court.
The plain facts of the case, however, make it clear that after the mukarrari interest had been granted to them on 24th January 1914, the Raja of Tamkuhi immediately interfered, and it seems clear that the mukarraridars never obtained possession before they brought their suit later in 1914. In that suit they claimed possession which clearly shows that they had never actually been in possession. Further, the sale deed itself merely states that after the High Court decree delivery of possession was given to Brahmadeo Singh and his cosharers. The nature of the property could only allow of delivery of symbolic possession, and this must have been perfectly clear to defendant 1 when he purchased the property. That they were given symbolic possession is beyond doubt, because later they were made to pay mesne profits to the Raja of Tamkuhi for the dispossession which occurred after the High Court decree.
In my view, defendant 1 bought the rights of the plaintiffs'' father for what they were worth and bought with full knowledge of the risks which he incurred. These rights were undoubtedly transferred to defendant 1, though ultimately they proved to be worth little or nothing. Defendant 1 was given such possession as Brah-madeo had and he was substituted in the execution case after the High Court decree, and he recovered Brahmadeo''s share of the costs which had been deposited by the Raja of Tamkuhi.
Further, defendant 1 could have been substituted or added as a party in the litigation pending in the Privy Council, though in fact he did not move for such substitution or addition. Up until the decision of their Lordships of the Privy Council defendant 1 could undoubtedly have recovered his proportion of the rent from the tenants of these two villages, and that being so, it cannot possibly be said that the sale deed was without consideration. Defendant 1 received under it all that Brahmadeo Singh contracted to give, namely his interest subject to the result of the Privy Council appeal in the two villages in question. The fact that the rights proved, far less valuable than the parties imagined cannot affect the result as the purchaser did receive everything which he contracted to buy, namely the plaintiffs'' rights subject to the litigation. Where a person under a purchase obtains what he desires, he cannot later be heard to say that as those rights wore worth little or nothing the transaction is void for want of consideration.
In Begbie v. Phosphate Sewage Co. Ltd. (1875) 10 Q.B. 491 the defendants, a limited company being possessed of a process (for which a patent had been taken out in England, but not for the foreign city of Berlin) for the utilization of sewage, agreed to sell to the plaintiff for �15,000 the sole and exclusive right to use and exercise the patent in Berlin. The plaintiff was aware that by the law existing at Berlin no exclusive right to use the process there could be obtained. The directors of the defendants'' company were not aware that the patent for Berlin had not been obtained. The object of the plaintiff in buying the exclusive right was, that he might form a company for using the process in Berlin, and might induce persons to take shares in the company, under the belief that, if the company bought of the plaintiff the right sold to him by the defendants, the company would be entitled to the exclusive use of the process in Berlin. The plaintiff sued the defendants to recover back his �15,000, on the ground that, as there was no exclusive right to the use of the process in Berlin, the consideration had failed. It was held by Cock-burn C.J., and Quain and Meld JJ. that no action could be maintained, inter alia, on the ground that, although the defendants ostensibly sold the exclusive right to use the process at Berlin, yet the plaintiff''s object being to float a company and induce persons to take shares in it, he had intended to buy the right whether exclusive or not, and that he had, in fact, obtained that for which he had paid the �15,000. That being so, there was consideration for the agreement. The decision was upheld by the Court of appeal: see Behbie v. Phosphate Sewage Co. Ltd (1876) 1 Q.B.D. 679.
A somewhat similar case to the present came up for decision before a Bench of the Calcutta High Court in Indra Narain Das v. Badan Chandra Das AIR 1918 Cal. 662. In that case the plaintiff made a speculative purchase of a piece of land from the defendant. The latter protected himself by inserting a clause in the conveyance to the effect that if the plaintiff was dispossessed by anybody other than the vendor defendant, the latter would not be liable to the purchaser. It was held that on the failure of the purchaser to obtain possession of the land, he was not entitled to a refund of the purchase money on the ground that the consideration had wholly failed. In short, he had obtained what he had bargained for, and his failure to obtain possession was not due to the act of the vendor.
Another case, Ajodhya Jha v. H.E. Cox AIR 1920 Pat. 552 shows that where a person obtains what he has bargained for the agreement or sale is supported by consideration, although the right obtained may eventually be worthless. In that case the manager of an Indigo factory on the one hand and the tenants of the factory on the other believed in good faith in the existence of an obligation on the part of the tenants to grow indigo on a certain portion o� their holdings, and the latter, in order to obtain a release from the obligation, real or supposed, executed promissory notes in favour of the manager. It was held that these promissory notes were supported by valid consideration, even though it was not established that the tenants were under an obligation to grow indigo.
The case in Motivahoo v. Vinayak Veerchand (88) 12 Bom. 1 appears at first sight to favour the defendants'' contention that there was no consideration for the sale deed in the present case. R having stolen from N the title deeds relating to a certain property in Bombay in which he had no interest, but which belonged to N, deposited them with the plaintiffs, to whom he also executed an indenture of mortgage of the property comprised in the deeds to secure the repayment of a loan advanced to him by the plaintiffs. The plaintiffs subsequently sold the property at an auction sale under the power of sale contained in the mortgage. The property was put up to auction under certain conditions of sale, of which the following was one:
The vendors shall not be bound to give any better title to the purchaser than they themselves possess; and the purchaser shall take the premises sold with such title only as the vendors can give him.
Before the sale commenced, a notice on behalf of N was read out to the persons then present, which stated that she claimed the property as absolute owner, and that E (who had mortgaged it to the vendors) had no interest in it. The defendant was not present when the notice was read. He did not arrive at the auction until after the bidding had begun, but on his arrival he was told of N''s claim. He was told nothing to make the above condition of sale misleading. He bid for the property, and ultimately became the purchaser for Rs. 1075. He immediately paid Rs. 275 by way of deposit and signed an agreement to complete which had the conditions of sale annexed to it. He subsequently ascertained that E had no interest in the property and thereupon he called upon the plaintiffs to make out a good title, or to repay his deposit. The plaintiffs, however, relying on the above condition of sale, required him to complete his purchase; and he having failed to do so, they filed a suit against him, to recover the balance of the purchase money.
It was held that the defendant was not liable to pay to the plain, tiffs the balance of the purchase money. The suit although in form a suit to re-cover the residue of the purchase money, was virtually one to compel specific performance, and was governed by the principles applicable to such a suit. The purchaser was entitled to say that the above condition of sale implied that the vendors had some title, however defective it might be, and he had received at the auction no information which could be regarded as giving him notice to the contrary. It is to be observed that the case was treated as one for specific performance, and in the circumstances it would have been inequitable to enforce this contract against the purchaser. Further, the Court held that the condition of sale implied that the vendors had some title, and this they had failed to show.
In the case now before the Court the terms of the sale deed clearly show what interest the vendor had and the purchaser purchased that interest well knowing what it was and how it was likely to be defeated.
For the reasons which I have given above I am satisfied that there was consideration for the sale deed and that being so the learned subordinate Judge was wrong in holding that the deed was void for want of consideration. Counsel for the defendants-concede that if there was consideration for the sale deed then it did create a liability for sums mentioned therein and the payment of which could be secured by execution of the security bond now sued upon. I am therefore bound to hold that there was consideration for the security bond. Holding as I do that the deed of sale was for consideration defendant 1 is liable under the security bond to pay to the plaintiffs any sum recovered by the Baja of Tamkuhi from Brahmadeo Singh by way of costs and for interest thereon at the bond rate, namely Rs 1-8-0 per cent, per mensem.
The question, however, arises whether this sum can be recovered by sale of the property mortgaged, namely Bahio and Barai. In my judgment the plaintiffs are not entitled to a mortgage decree in this case. As I have stated earlier, the learned subordinate Judge was right in holding that the mortgage wag not for family necessity and therefore could not bind the family property. It was urged that defendants 5 to 10 who were subsequent mortgagees could not have raised this plea but the plea has been raised by defendants 2 to 4 who were coparceners of defendant 1. They can certainly raise the plea and in my view it is beyond question that this mortgage not being for family necessity was void and would not bind the family property. It has been repeatedly held that where such a mortgage is found to be void it does not even bind the undivided share of the coparceners who actually executed it. Unless subsequent events have made the share of defendant 1 liable, no mortgage decree even against his share can be passed.
On behalf of the plaintiffs, it was argued that separation has occurred in the family of defendant 1 since this suit was instituted. It is to be observed that in the plaint the plaintiffs actually allege that defendants 1 to 4 were members of a joint family; but a document was produced during the trial, namely, Ex. 11, which shows that defendant 2 made an application for leave to sue as a pauper and claim partition of his share from defendants 1, 3 and 4. It is argued that the effect of this claim for partition was to disrupt the joint family and that thereafter the shares of the coparceners would not be joint but would be separate shares. It appears that this partition suit has proceeded and that the share of defendant 2 has been separated. It is clear that where one coparcener has made an unequivocal declaration to the other coparceners of his intention to separate, the presumption of jointness in the family has gone. Thereafter the share of such coparcener is separate and whether the shares of the other coparceners are separated or remained joint must depend upon the facts of each particular case.
This is clearly laid down in AIR 1939 174 (Privy Council) . Belying on this case, it was urged that after this partition suit was instituted by defendant 2 the shares of the other coparceners were separate and that defendant 1 is now the owner of a separated share and not the owner of an undivided share along with the other coparceners. It is however clear that where one brother separates from a family there is no presumption that such separation works a disruption in the family of another brother and his sons and grandsons.
In Hari Bakhsh v. Babu Lal AIR 1924 P.C. 126 their Lordships of the Privy Council held that the fact of a separation having been effected between brothers constituting a joint Hindu family governed by the Mitakshara law raises no presumption that there was a separation of the joint family constituted by one of the brothers and his descendants. Defendant 2 was a nephew of defendant 1, whereas defendant 1 is the father of defendants 3 and 4. It follows therefore from the decision in Hari Bakhsh v. Babu Lal AIR 1924 P.C. 126 that there is no presumption that defendants 1, 3 and 4 have separated because defendant 2, a son of a brother of defendant 1, has separated from the family. In any event, the facts of this case make it clear that, even if the plaintiffs can rely upon an allegation of separation after the institution of the suit, no separation has in fact been proved. Bhulan Prasad Singh, plaintiff 1, in evidence stated that defendants 1, 3 and 4 were joint at the date he gave evidence, and paras. 5 and 6 of Ex. 11 relied upon by the plaintiffs clearly show that these defendants are still joint. In those paragraphs the present defendant 2 alleges that his father and defendant 1 separated in 1917 though there was no partition by metes and bounds. He admits that after such separation the present defendants 1, 3 and 4 remained joint and were joint at the date of that exhibit. Defendants 3 and 4 in their written statement did plead that they were-separate from defendant 1, though defendant 1 makes no such allegation in his written statement. The only material therefore upon which separation can be established is the statement made in the written, statement of defendants 3 and 4. That is an admission; but having regard to all the circumstances it is impossible to accept that admission as true. Everything points to the continuation of a state of jointness between defendants 1, 3 and 4.
The plaintiffs contended that if there had been a separation in the family the mortgage, though originally void against the family property, would become a good mortgage binding on the separate share of defendant 1 the moment the latter had separated from the other members of his family. In my view, the evidence and the circumstances establish that though defendant 2 has separated from the family, defendants 1, 3 and 4 are still joint and therefore there is no separated share of defendant 1 which could be made liable under the mortgage. That being so, it is unnecessary to consider whether in the event of separation being established the share of defendant 1 would be liable under the mortgage. As I have stated earlier, the learned sub-ordinate Judge held that the subsequent mortgagees defendants 5 to 10 under two mortgages, dated 5th September 1929, and 16th July 1931, had constructive notice of the security bond now sued upon; but that cannot affect the case, because it has not been established that the share of defendant 1 has become separated and no question of the mortgage being binding on that share can arise. That being so, the mortgages of defendants 5 to 10 are in no way affected by this security bond.
Next it was argued that the interest claimed in this case was excessive. It was suggested that the Court should reduce the rate of interest under the provisions of the Usurious Loans Act; but, in my view, that Act can have no application to the present case. This is not in any sense a loan; but even if it was, there is nothing here to suggest that the agreement was unconscionable or unduly hard. Defendant 1 was in no way under the influence of Brahmadeo Singh, and there is nothing to suggest that circumstances compelled him to agree to a higher rate of interest than was usual in such transactions. The mere fact that the rate of interest is somewhat high is not in itself a ground for interference.
Lastly, it was contended that the Court should reduce the rate of interest under the Bihar Money, lenders (Regulation of Transactions) Act, 1939, which has been made retrospective. In my view the mortgage created by the security bond is not a mortgage to secure a loan as defined by the Bihar Money-lenders Act. In that Act "loan" is defined by Section 2(f) as.
an advance whether of money or in kind on interest made by a money-lender, and shall include a transaction on a bond bearing interest executed in respect of past liability and any transaction which in substance, is a loan.
In the present case there was no advance and nothing which in substance can be regarded as an advance. Further, it is not a transaction on a bond bearing interest executed in respect of a past liability. It is a bond bearing interest executed in respect of a future and contingent liability. That being so, defendant 1 is not entitled to any relief under the Bihar Money-lenders Act.
The result therefore is that this appeal is allowed in part and the decree of the learned subordinate Judge, so far as it was passed in favour of defendant 1, is set aside and the suit decreed against him personally for the principal sum claimed with interest up to the date of the suit with pendente lite and future interest at the rate of 6 per cent, per annum. No mortgage decree, however, is made against defendant 1. The appeal, in so far as it is directed against the other defendants, is dismissed. As the plaintiffs have partially succeeded in this litigation against defendant 1, they will be entitled to half their costs in this Court and in the Court below. The plaintiffs will, however, have to pay the costs of defendants 5 to 10 of this appeal.
Manohar Lall J.
I agree.