HARIKRISHNAN Vs. SRI CHANDA PRABHUJI JAIN TEMPLE

JUDGEMENT

(1.) THIS appeal which arises from the judgment of Balakrishna Aiyar J. Granting a decree in favour of the respondent on the food of two mortgages of the respondent on the foot of two mortgages dated 4-3-1950 and 31-5-1950, has been placed before us on account of conflict between the decisions in N. Venkataswami v. R. Veeranna, ILR 45 Mad 429: (AIR 1922 Mad 135) and Raman chettiar v. Thirugnanasambandam Pillai, ILR 50 Mad 217: (AIR 1927 Mad 233 ). Before considering the correctness or otherwise of the decisions referred to above, it is necessary to set out the relevant facts which have given rise to this appeal.

(2.) ONE Gopalakrishna Raju, who owned substantial properties, died on 13-111941, leaving behind him two widows, Lakshmi and Manorama, and three children born of the latter,-a son, who is the appellant in this appeal, and two daughters. A few months before his death, Gopalakrishna Raju executed, and duly registered, a will, bequeathing his properties substantially to the appellant. Lakshmi was given a life interest in a few immoveable properties in Tirunelveli Dt. Maonorama, the second wife, was appointed the executrix under the will. The will made it clear that monorama should have no power to sell, mortgage or otherwise alienate the immoveable properties left by the deceased. The executrix was not given any beneficial interest in the properties beyond a right to be maintained befitting her dignity and status. No probate or letters of administration were taken of the will. Manorama who was in possession of the properties asserted that she, as the widow of the deceased, was entitled to half of the properties left by him, and that she, as the natural guardian of the minor son, was entitled to remain in possession of the properties. On 7-6-1948, she mortgaged certain properties to raise a loan of Rs. 7000 for the purpose of the marriage of her first daughter. About two months thereafter, she filed O. P. No. 269 of 1948 on the original side of this court, praying that she might be appointed as the guardian of her minor children and seeking permission of the court to raise a loan of Rs. 20,000, for discharging the debts till then incurred and for the celebration of the marriage of here second daughter. She suppressed in the petition the existence of the will stating that Gopalakrishna Raju died intestate and that the loan was necessary for purposes binding on her son. Along with the petition, she also filed appln. No. 2595 of 1948, seeking permission to raise the loan on the mortgage of the properties. Subba Rao J. Passed an order on 9-91948 appointing Manorama as the guardian of the person and properties of the minors. The learned Judge passed another order in the accompanying application giving leave to her to raise a loan of Rs. 7000 on mortgage of two houses belonging to minors, Armed with the order, she executed a mortgage and borrowed a sum of rs. 7000 on24-9-1948 from one Raja Lakshmi Ammal. Within a short time thereafter, she filed appln. No. 4689 of 1949 seeking the sanction of the court to raise a loan of Rs. 40,000; but, in the affidavit that followed the application, the amount was restricted to Rs. 30000. On 23-1-1950 Rajagopalan J. Granted leave to her to raise a loan of Rs. 30000 on the security of two houses. The loan was intended to discharge the two earlier mortgages and pay off the other liabilities said to have been incurred by her. The learned Judge while granting the sanction, observed that there were debts contracted by the guardian which would bind the estate of the minor. On the strength of this order, Manorama borrowed on 4-3-1950 a sum of Rs. 30000 from the respondent, the trustee of Sri Chandra Prabhuji Jain Temple, after executing a mortgage of the two items of properties referred to earlier. Manorama's need for money was evidently insatiable. Within a few days after borrowing this large sum of money, she applied to this court again in Appln. No. 754 of 1950 for raising a further loan of Rs. 15000, stating that she still had pressing debts to the extent of Rs. 12000: The application was filed on 24-4-1950. On the following day, Krishnaswami Nayudu J. Granted her leave to raise a loan of rs. 10000 on the same set of properties. The order enabled Manorama to obtain a further loan of Rs. 10000 from the respondent. This was done by executing a second mortgage in favour of the latter on 31-51950 over the same properties. Towards the end of that year. The appellant's mother filed yet another application to sell one of the houses with a view to enable her to discharge the amounts duet o the respondent under the two mortgages and for paying the debts subsequently incurred by her. A sale was ordered, and the indian Bank Ltd. Purchased one of the properties for a sum of Rs. 41,500. But, before the sale was confirmed, the bank appears to have obtained information about the will left by Gopalakrishna Raju; it thereupon applied to have the sale in its favour set aside. This was done on 8-2-1952. Sometime earlier that is immediately on the existence of Gopalakrishna Raju's will was brought to the knowledge of this court, Krishnaswami Naydu J had directed the Administrator General to take immediate possession of the estate of the deceased and to apply for Letters of Administration. The Administrator General obtained Letters of Administration and took possession of the estate. In the course of his administration, the Administrator General, after obtaining the sanction of the court, put up for sale the same property. The Indian Bank purchased it for rs. 39200. The net sale proceeds have been retained by the Administrator General. The respondents thereupon instituted the suit, out of which this appeal arises, to recover the moneys due to them in respect of the two mortgages executed by manorama in their favour on 4-3-1950 and 31-5-1950 in pursuance of the leave granted by this court inappln. No. 4689 of 1949 and 1754 of 1950 ). The suit was contested on behalf of the minor on the ground that Manorama had no authority to execute the mortgage and that the creation of the mortgages was the result of a fraud practised by her on the court. Balakrishna Aiyar J. Held that manorama deliberately suppressed all information about the will of her husband to the court and that the orders authorising her to raise loans on mortgage over the property of the appellant were procured by fraud. But the learned Judge held that the respondents were, however, not parties to the fraud, that they were acting bona fide, that under the circumstances, the lender could not be required to go behind the orders of the court granting sanction to the guardian to raise a loan, and that the mortgages would therefore, bind the interests of the appellant. On these findings, a preliminary decree followed.

(3.) IN this appeal, the appellant challenges the correctness of the view by balakrishna Aiyar J. In regard to the binding nature of the mortgages. One of the main points that arise for consideration in this appeal relates to the extent to which the mortgagee can rely on the two orders in order to support the mortgages executed in his favour by the guardian. The order directing this appeal to be heard by a Full Bench does not formulate any specific question for decision---the entire appeal has been and is before us. But, having regard to the arguments before us, we considered that it would be better to specify the question for decision and dispose of the appeal in the light of the answer thereto. We have therefore framed the following question: