VENKATASWAMI NAICKER Vs. PALANISWAMI CHETTIAR ALIAS PONNUSWAMI CHETTIAR

JUDGEMENT

(1.) This appeal arises out of a suit to recover a sum of Rs. 63,000 and odd due to the plaintiffs on a mortgage bond, dated 26 March 1920 (Ex. A), executed by the 1 defendant. Defendants 2, 3 and 4 are the sons of the 1 defendant. The 5 defendant is the Official Receiver of Coimbatore representing the 1 defendant who has become an insolvent. The Court below gave a decree as prayed for. The 4 defendant alone appeals.

(2.) The deed of mortgage, Ex. A, was executed for Rs. 40,000 consisting of Rs. 30,000 borrowed for the purpose of paying the branch of the Madras Bank at Coimbatore and Rs. 10,000 received at the time of registration. The learned vakil for the appellant argued that neither of the items is binding on the 4 defendant so as to form consideration for a mortgage. Taking the first item of Rs. 30,000, the existence of the prior debt to the Bank of Madras at Coimbatore and the payment of Rs. 15,000 by the 1 plaintiff and another Rs. 15,000 by the 2nd plaintiff on the 30 March, 1920 to the Bank of Madras in diminution of the debt of the 1 defendant is proved by Ex. D, the account of the Bank and also Exs. B, B-l, C, C-l, chalan and receipt for each payment. The learned vakil for the appellant contends that the 1 defendant was speculating and the debt of the Bank was in connection with some other person as security. Ex. D shows that it was his own debt. The 1 defendant says as D.W. 1 that Rs. 30,000 was for money clue on a promissory note debt negotiated by himself and drawn by his brothers-in-law in his favour. Whatever the origin of it may be, Ex. D shows it was his own debt and it is binding on him.

(3.) We now come to the second item of Rs. 10,000 as to which it appeared at first that the appellant had got a better case than the other item. The facts relating to this item and hearing on the history of the family may be stated as follows. The 1 defendant's family was a money-lending family from the time of his grandfather. They had a Bank called Rukmani Vilas which ceased to work some years ago. Some time about 1917-18 the family started a ginning factory at Ondiputhur. Originally the 1 defendant intended to take other partners and he took from the 2nd plaintiff Rs. 1,000 towards his share of the capital and other amounts from the other intended partners. Ultimately he retained the factory entirely for himself and returned the amounts collected from the other intended partners. But in the case of the 2nd plaintiff he lent a pair of ear-rings to him (2nd plaintiff) and afterwards, according to the 2nd plaintiff, asked him to take the ear-rings towards the amount, paid for the 2nd plaintiff's share of the capital of the partnership. The 1 defendant says nothing about Rs. 1,000 owing to the 2nd plaintiff but merely says that the price of the ear-rings is still due to him. In the matter of the ear-rings the Subordinate Judge believed the 2nd plaintiff's evidence and we see no reason to differ from him. Then in 1920 Rs. 10,000 was borrowed under the suit mortgage bond for the needs of the ginning factory. The 2nd plaintiff says, "They wasted the balance for the needs of a ginning factory which their family was running." I take this to mean that the ginning factory had been started some time before the borrowing of Rs. 40,000. The 1st defendant does not give any definite evidence as to when the factory was started. According to the statement made by the 2nd plaintiff (P. W. 1) in cross-examination, it must have been started in 1917-18. Now it is contended before us by the learned vakil for the appellant that the cotton trade was not an ancestral business and therefore money borrowed for the ginning factory is not binding on the 4 defendant. Incidentally I may observe that defendants 2 and 3 who were majors at the time of the execution of Ex. A not only attested the document but afterwards executed Exs. E and F, admitting their liabilities under Ex. A. The 4 defendant happened to be a minor not only in 1920 but up to 1923. It is true that the family had no cotton trade before the time of the 1 defendant and that the trade was started by him for the first time. There is no principle in Hindu Law prohibiting a person from starting any trade he likes. If the trade which a person who is the manager of a family is carrying on can be regarded as an ancestral trade, it will be binding not only on his sons but also on his brothers and other collaterals; but if the trade is not an ancestral trade in his hands but a trade started for the first time by himself it will not be binding on his brothers and other collaterals though he is the manager of a joint family unless per-. haps it can be shown to have been profitable at least for some time and that the collaterals have participated in such profits; but as against his sons certainly it is an ancestral trade in the sense that the father is an ancestor though it is not an ancestral trade in the hands of the father himself. Whether one may call it ancestral or not the debt borrowed for the needs of the trade cannot stand in a worse position than any other debt contracted by the father which is not illegal or immoral in the matter of its binding the sons. From the point of view of the sons liability 1 do not see what difference it makes whether it is a trade started by their father or a trade started by their grandfather. Mr. Ramachandra Aiyar contends, while conceding that such trade debts may be binding on the sons as mere money debts, that they will not form proper consideration for a mortgage or sale. But that question depends simply upon whether there was an antecedent debt or necessity at the time of the mortgage. Now if there is family trade carried on by the father for the benefit of himself and his children and in the course of the family trade he finds that he is in need of money for meeting the purposes of the trade, I do not see why a debt borrowed on mortgage should not be regarded as a debt for necessity. Here we find that the ginning factory was started some time in 1917-18 and it was going on up to 1920. The presumption is that it was going on as family trade for the benefit of the whole family just as property acquired by a member of the family, particularly the father or manager, will be presumed to be property purchased on behalf of the joint family where the family had a nucleus of ancestral property and it is for members who claim it to be self-acquired property to show that it is self-acquired. Similarly where the father builds a factory for ginning and other evidence shows that the father was in possession of ancestral property (here we have got evidence that the family had lands annually yielding Rs. 8,000) the presumption would be that the factory was built with joint family funds, and it is for those who want to assert that it has nothing to do with the joint family to prove that the factory was erected by means unconnected with the joint family. There is no such evidence here. Thus we start with the position that the family had run a ginning factory with the joint family funds from 1918 to 1920. In 1920 further materials were needed for the factory. The father then borrowed Rs. 10,000 from the plaintiffs. Coimbatore is a cotton-growing district. Cotton trade is a legitimate trade for trading families in that district. We cannot say that building a ginning factory was of such speculative kind that money borrowed later on for its needs should not be regarded as for necessity from the point of view of the sons. I am therefore of opinion that there was a family necessity in 1920, supporting the mortgage, Ex. A. This is the view I took In the matter of Radhakrishniah Chetty (1924) 9 L.W. 415 at 417. In that case I merely expressed an opinion to this effect on the first point and stated it was unnecessary for me to give a decided opinion having regard to my decision on the second point, However it is necessary here to decide the point and I adhere to the opinion I then expressed. I think the mortgage is binding on the 4 defendant also. It is clear that every member of the family mi juris thought at the time that it was a good venture and they were going to be profited by it.