SHEO PRASAD BANSAL Vs. KULSHARASTRA SABHA

JUDGEMENT

(1.) These are two connected appeals arising out of a mortgage suit and can conveniently be disposed of together. The facts are as follows : There is a society styled Kulsharastra Sabha in the town of Aligarh. One Babu Kamta Prasad, a vakil, was the secretary of this Sabha. The plain, tiff alleged that the Sabha, through its secretary, had borrowed a sum of money from him and had executed a mortgage deed on behalf of the Sabha. The suit was instituted for enforcing the mortgage deed. The Sabha denied the mortgage set up and further pleaded that even if its execution was proved, it did not bind the Sabha as the secretary had no power to execute the same on its behalf. The secretary's defence was that the Sabha was bound as the loan had been taken under the orders of the Sabha and the money borrowed was spent on the property of the Sabha, The trial Court held that the mortgage was not binding on the Sabha. The suit was dismissed as against defendants 1 and 2. The plaintiff appealed. The lower Appellate Court agreed with the view of the trial Court that the mortgage deed was not binding on the Sabha. Two appeals have been preferred. One is by the plaintiff. The other is by Babu Kamta Prasad, defendant 3. The principal question for the determination in the case is whether the mortgage deed in. suit is binding on the defendant Sabha. I have heard learned Counsel on both sides and I am clearly of opinion that the view taken by the Courts below that the Sabha is not bound by the mortgage deed is not correct. It is established that Kamta Prasad executed the mortgage deed in suit. The terms of the mortgage deed are before me. I have no doubt in my mind that Babu Kamta Prasad executed the deed on behalf of the Sabha and I entirely agree with the finding of the lower Appellate Court on this point. The learned Judge says: On a perusal of the above I am quite satisfied that Babu Kamta Prasad effected to mortgage the Boarding House on behalf of the Sabha under the authority he claimed to have obtained from itB Managing Committee....

(2.) The learned Judge of the lower Appel. late Court however held that the Sabha had no power under its Rules and Regulations to permit the secretary to create a mortgage. On this point, it appears to me that the view of the learned Judge is quite wrong. The learned Judge admits that the Sabha under the rules are invested with the power to sell or mortgage its property. Ho further finds that the Sabha has the power to delegate its power to the Managing Committee. He however thinks that under the rules the Managing Committee has no power to delegate its authority to the secretary. There is no authority for the view taken by the learned Judge of the lower Appellate Court. If the Sabha has the power to sell the property owned by it, lit has the power to delegate its authority to the Managing Committee. And similarly, the Managing Committee has full power to delegate its power to anyone it likes. Now, we find that in the case before me, the Managing Committee passed a special resolution at a meeting authorizing and empowering the secretary to mortgage the Boarding House as a prior debt due from the Sabha had to be paid. It is not easy to understand why the Managing Committee was not entitled to delegate its power to the secretary. It may be pointed out that the learned Munsif in his judgment says that no resolution was passed by the Managing Committee. But this view is entirely wrong and the trial Court went out of its way to come to this finding. The plaintiff had produced evidence to show that a resolution was passed. But none of the members of the Managing Committee had the courage to come forward and state on oath that this was not true. No evidence was produced on behalf of the defendant Sabha to rebut the evidence of the plaintiff. In these circumstances the view taken by the Munsif was entirely wrong. It must therefore be held that a resolution was passed by the Managing Committee under which the secretary was empowered to create the mortgage in suit.

(3.) The learned Munsif in his judgment refers to a passage in Bagchi's Law of Corporation in British India (T.L. Lectures) and thinks that it goes against the plaintiff. The passage is to be found at page 120. It runs as follows: When property is conveyed by a corporation or a charge is created on corporate property, the dispositive acts are to be done in the corporate name. Thus if a mortgage is executed by the corporators in their individual names, although all may join, and although they all may intend to bind the corporation, such a mortgage is not a valid legal incumbrance on the corporate property.