AMBALAVANA PILLAI Vs. GOWRI AMMAL

JUDGEMENT

(1.) This appeal arises out of a mortgagee's suit for sale. The appellants (defendants 1 to 4) are the sons of one Muthuvelayudham Pillai who died early in 1910, when the eldest son defendant 1 had just attained majority. It is said that Muthuvelayudham left a will whereby he appointed his wife's brother Arunachala to be the guardian of his minor sons. According to the decision of the Full Bench in Chidambara Pillai V/s. Rangaswami Naicker 1919 41 Mad 561 this appointment of Arunachala as guardian must be held to be invalid as the father and sons were members of a joint Hindu family and the property was ancestral. The evidence establishes that Muthu Velayudha was indebted to the extent of about Rs. 10,000 at his death and some of the creditors pressed for payment. A sum of Rs. 8,000 was accordingly borrowed in October 1910 under the suit mortgage to pay off the creditors named in the mortgage bond Ex. A. The mortgage bond was executed by defendant 1 and by Arunachala as testamentary guardian of defendants 2 to 4. Various contentions were raised before the lower Court, some of them, we regret to say, reckless and frivolous in view of the facts established by the evidence. The appellants went so far as to say that their father left no debts, that there was no necessity to borrow, that no money was borrowed under Ex. A and that the document must be the result of collusion between plaintiff and Arunachala. These points were all found against the defendants in the lower Court and were not: argued before us. The principal question pressed in appeal was the plea of limitation; but before dealing with it, we may briefly dispose of one other contention advanced by the learned Counsel for the appellants.

(2.) Out of the sum of Rs. 8,000 borrowed under Ex. A, the lower Court found that Rs. 7,300 odd had been shown to have been applied in discharge of debts due by the father. This finding was accepted by Mr. Venkatachariar; but he argued that in the absence of proof as to the application of the remaining sum of Rs. 600 odd, the mortgage could not be held to that extent binding on defendants 2 to 4. There are two answers to this contention. It has generally been recognized that when the proper application of a substantial portion of the consideration amount has been proved, the Court might in the absence of circumstances creating suspicion presume that the small balance is also likely to have [been required and applied for proper purposes. There is no reason for drawling a distinction between a sale and a mortgage, in the application of this rule of evidence. Secondly it is a well established rule that once circumstances of necessity are shown, a bona fide lender is not bound to see to the actual application of the money lent. The evidence in this case establishes that there were debts to the extent of about Rs. 10,000 at the time of the suit mortgage. Ex. L is one of the promissory notes referred to in the suit mortgage. But for their own convenience the mortgagors did not wholly discharge Ex. L, but utilised part of the mortgage-money for discharging the debts due under Exhibits D and E and repaid only a portion of the debts due under Ex. L. In these circumstances, there is no reason to doubt that the mortgagee bona fide believed that the amount borrowed was required to meet debts due by the father.

(3.) The Subordinate Judge observes in paragraph 14 of his judgment that at the trial the defendants did not seriously dispute the payment of consideration or the binding character of the purposes for which the loan was borrowed. The question of limitation arises under the following circumstances: The mortgage bond fixes a period of 5 years for payment. The period of limitation for a suit on the mortgage would thus have expired in the ordinary course in October 1927. An extreme contention put forward on behalf of the plaintiff that under the terms of the document limitation would commence to run only from the date of demand by the plaintiff and that such demand in respect of the principal amount was for the first time made only in August 1928 was rightly rejected by the lower Court.