SRI CHANDRE PRABHUJI JAIN TEMPLE & Ors. v. HARIKRISHNA & Anr.

(iii) In the praent apPeal. one item of the properties has been sold by the . A.G. throuJb the UDCtion of the Court. and the proceeds of the sale a~e w_ith him. Therefore a decree is paaed agtumt the respondent/defendants d1recttng lhem to pay fbi appeDanfl the principal amounts. due under the two mortgages together with 6% interest from. June 1, 1950, on the principal amount Upto the date of payment or rcr. Jisation. ~ amount decree4 will be a charge on fhe sale proceedt of one of the properties which are being retained by the A.G. and the entire interiet in the other property un<ler the rnortga~e. [452 EJ ·CML APPELLATE JUum~cnoN : Civil Appeal No. 1701 of H . 1967. Appeal from the judgmept and order dated December 1, 1961 ot the Madras High Court iri O.S.A. No. 17 of 1957. 444 SUPREME COURT REPO.RTS [ 1974] 1 s.c.R. V. M. Tarkunde, Harbans Singh and H. S. D~r, for the appellant. M. Natesan and S. Gopalakrishnan, for respondent No. 1. The Judgment of the Court was delivered by MATHEW, J.:......One Gopalakrishna Raju (hereinafter called Raju) ~ed in Madras on or about November 13, 1941, leaving behind him ms Widow Manorama, one mmor son and two minor daughters. On March 25, 1941~ Raju had executed a will whereby he appointed Manorama the executor of the will and the guardian of his_ minor son and daughters and bequeather aJ his properties to the·minor son with directions as regards the maintenance and marriage o£ his daughters. On June 7, 1948, Manorama mortgaged certain properties to raise a loan of Rs. 7,000/- for the purpose of meeting the marriage exp~nses of- her elder daughter. Thereafter, she fileg an application under sec tions 7 and 10 of the Guardians and Wards Act. 1890, ,hereinafter called the Act, on August 26, 1948, before the High Court of Madras In that petition to appoint her as the guardian of her minor children. she did not disclose that Raju died after executing a will, but said that Raju died leaving two houses Nos. 18 and 18A in Egmore. Madras and that she was the owner of one half of the houses and that her minor son wa! the owner of the other half. She also said that no guardian had been appointed of the person or the property of the minors. Along with the petition for appointing her as guardian, she also filed an application seeking permission of the court to raise a loan of Rs. 7,(}(X)f .the Court by mortgaging the two houses. On September 9, 1948, passed an order appointing Manorma as the guardian of the person and property of the minor son and daughter and, by another order, granted her permission to raise a loan of Rs. 7,000/- by mortgaging the two houses. On the basis of these orders, she borrowed a sum of Rs. 7,000/- on September 24, 1948, by mortgaging the two houses. Thereafter, she filed another application on January 19, 1950, seeking permission of the High Court to raise a loan of Rs .. 40,0001- on the ~curity of the two houses. On January 23, 1950, the application was allowed under s. 29 of the ' Act permitting her to raise a loan of Rs. 30,000/- on the security 0f the two houses belonging to the minor. On the strength of this order, Manorama borrowed on March 4, 1950, a sum of Rs. 30,0001- from the trustees of Shri Chandre Prabhuji Jain Temple, the appellants before this Court, by executing a mortgage of rhe two houses. She again applied on April 24, 1950, to the Court for raising a further loan of Rs. 15.000/- on the security of these two houses but sanction was accorded to raise a loan of only Rs. 10.000/· On the basis of this order she borrpwerl a further sum of Rs. 1,000/~ from the appellants by executing a -mortga!!e on Mav 31, 1950, of the same properties. Manorama filed yet an-other application praying for permission to sell one of the houses with a view to enable her to dis charge the amount due to the appellants under the two mortp:ages. The permission was granted and the Indian Bank Limited purchased one of the house properties for a sum of Rs. 41.500/- It would aop~ar that subsequent to the execution of the sale, the bank came to know that Raju had executed ;~ wilt. So the bank applied to the High Court to A B c () E F G H .JAIN TEMPLE 1'. IIARIKR!SUNA (Mathew, J.) 445 have the sale set aside. This was done. When the existence of the will executed by Raju was brought to the notice oi the Court, Krishna swami Nayudu, J. directed the Administrator-General to take imme diate possession of the estate of Raju and for Letters of The Administrator-General obtained Letters of Administration. In the course of Administration and took possession of the estate. the, 1he administration, sanction of the Court put up for sale one of the houses in question. The the Administrator-Genera], after obtaining to apply Indian Bank purchased it for Rs. 39,200/-. The sale proceeds arc l'eing retain~ by the Administrator-General. The appellants filed the suit on the original side of the High Court out of which this appeal arises, to recover the money due under the two mortgages executed in favo~ of the appellants by Manorama as r,uardian. The respondents, i1amely, the Administrator-General and the minor son, contended that Manorama had no authority to execute the mort gages and that she obtained the sanctions to ex~cute the mortgages by -practisin~ fraud uoon the court. Thev also cont~noed that the aooel· !ants had not acted with due care, that the sanctions to mortgage given bv thP. court W"'re onlv Drima faci~> evidence that the transactions were beneficial to the minors but that they would not cure any inherent de fect that existed in the transactions, that the enquiry conducted by a co'lrt in granting sanction was of a summary character, and that as the 'existence of the. will has not been brought to the notice of the court, the sanctions to raise the loans were invalid and did not bind the minor. Balakrishna Ayyar, J. who tried the suit held that Manorama de- liberately suppressed the execution of the will by Raiu and therefore, the orders authorising her to raise the amounts by mortgaging the oro· perties of the 2nd respondent were obtained by fraud. The learned Judge, however, held that since the orders were only voidable and as the appellants were not parties to the fraud and as they yere not requir- ed to go"behind the orders, th eappellants wen~ entitled to recover the amoun,t from the properties mortgaged and passed a preliminary decree. Against this decree the respondents appealed and the appeal was referred to a Full Bench as there was conflict of opinion on the question whether an order under s. 31 (2) of fthe Act granting leave to a guar dian for alienating the property of the wm:d was conclusive proof that the alienation- made in pursuance thereof was supported by necessity or benefit of the minor. t: c E F G H made by him; but that it will be open to the minor' challenging The FuR Bench held that an order under s. 31 (2) of the Act can be relied on by an alienee as a substitute for an honest enquiry to be a1ienation to show that the alienee was out on notice at the time of the alienation· of matters· which would show the defects in the transaction ot that the alienee did not act bona fide· It also held that where there is no evidence to show that there existed circumstances exciting sus picion as to the way in which an order under s. 31 (2) ~ obtained, ? -!..382Sup.Cl/74 446 SUPREME COURT :REPORTS [ 1974] 1 S.C.R. the alienee would be entitled to rely on it to support his title7 but ~t ,\ an order under s. 31(2) cannot be treated alwayS as conclusive as .to the existence of necessity or benefit and that even as to the suflicieocy of the enquiry to be made by the alienee, it would be competent for the minor to prove that the alienee did have sufficient reason not to rest on the mere order of the ~ourt. The court said further that if the minor proves that the alienee knew more Ol' did not himself rely on tho order but made indepeRdent enquiri~the onus being on the minor B to prove it-the order of the court will not afford conclusive evidem:e on the qut:stion of enquiry. However, if the alienee is not a party to any fraud and has no knowledge of any fraud the mere fact the guardian was guilty thereof will not dis_entitle him to rely on the order of the court as proving an honest enquiry by him. The court further found that the orders of sanction were valid even though they were made under s. 31 ( 2) of the Act notwithstandi.1g the fact Manorama was appointed guardian under the will of her husband . . The further finding of the court was that the mortgages could be en forced only against one half of the mortgaged properties as Manorama was appointed guardian only in respect of. that half. The court was of the view that the sanctions to execute the mortgages in respect of the two properties were only in respect of one-half share therein. The Court, therefore, passed a decree for recovery of the amounts from one-half of the properties mortgaged. that C D It is against this decree that this appeal by certificate bas been pre ferred. E The most important point canvassed on tehalf of the appellants was that the finding of the High Court that the mortgages were valid only interest in the properties was not correct. in respect of one half Counsel for the appellants submitted that Manorama was appointed guardian in respect of the person and the properties of her minor son and the fact the Manorama stated in the application to appoint her guardian that she was entitled to one-half of the properties and minor to the other half, would not conclude the question that she was appointed guardian only in respect of the half share in the properties. Counsel further submitted that under the Act or under the inherent powers of the Court, a guardian can be appointed only of all the pro perties of a miilor and not in respect of any specific items and that if a guardian is appointed of the properties of a minor in one district. it is not necessary that there should be a fresh appointment for the ~ penies of the minor in another district as under s. 16 of the Act, a certificate from the court appointing the guardian wOuld be conclusive evidence in the other district that he was appointed guardian of the properties in that district~. G In the application to appoint ber as guardian, Manorama t1tated that onlv the two houses were inherited by her and the m;no" son fr"tn her husband and that she was entitled to a half share in them with · limited rights and that her minor soa was entitled- to. the other half· In the aftidavit accompanying that petition she said that she has inherit ed half of the estlte of her buband of the value of Rs; 37,500/-. The order appointing her as guardian stated that she is declared guardian H JAIN TEMPLE v. HARIKRISHNA (Mathew, J.) 447 A of the person and properties of the minor and that as guardian she shall not, wunout prcv10us permis10n of tne court, mortgage, charge or transfer by sale, gift, exchange or otherwise any part of the immovable property of the minor or lease the same. In the application made by her for permission to execute the mort gage for Rs. 30,000/- as guardian, she has stated that she. required the loan to discharge the debts and the demands then existing against the properties belonging to her and her minor son as heirs of her late hus band. The order of the court on that application dated February 3, 1950, giving her leave stated that "the applicant do have permission to raise a loan of Rs. 30,000/- on the security of the two houses No. 18 and 18A". In the reasons given for that order, the court said that "the guardian is permitted to raise a loan of Rs. 30,000/- on the se curity of two items of property belonging the minor viz., Nos. 18 and 18A in Sait Colony, F:irst Street, Egmore, Madras". In the mortgage executed in pursuance to this order of sanction, Manorama described herself as executing the mortgage for herself, and as mother and guar dian as per the order of the High Court in O.P. No. 269 of 1948, namely, the original petition for appointing her as guardian. The court appointed Manorama as guardian of the properties of the minor. The order does not show that she was appointed guardian in respect of the one half interest in the properties. A person looking into the order could not have found any limitation in it. A purchaser of the properties of minor could not be expected to go behind the order. The court had no occasion to inquire nor did it make any enquiry as regards the extent of the interest of the minor in the properties. That apart, the orders sanctioning the mortgages in fact authorized Mano rama as guardian to mortgage the properties, even though in the appli cation on the basis of which the order sanctioning the mortgage for Rs. 30,000/- was passed, Manorama said that she was entitled to one half interest in the properties and that the minor to the other half (see para 1 of her application tJated January 19, 1950 for sanctioning the mortgage for Rs. 30,000/-). We think that the orders sanctioning the mortgages authorized her to mortgage the properties and not any particular interest therein. If her capacity to alienate the properties of the minor is to be judged from the orders of sanction, its extent must be measured by these orders read in the light of the orde'" appointing her guardian. c D E F G section 28 of the Act provides : "Where a guardian has been appointed by will or other inslrument, his power to mortgage or charge or transfer by ~ale, gift, exchange or otherwise, immovable property belong Ing to his ward is subjected to any restriction which m~ be imposed by the instrument, unless he has under this-Act lleen declared guardian and the court which mane the declaration pe_r~ts him ~y an order in writing,, notwithstanding the res tnctton, to d1spose of any immovable property specified in the order in a manner permitted by the order." II .:!48 SUPREME COUR:r REPORTS [ 1974 J 1 s.c.R. Manorama did not make any application under this section· Nor was the court appraised of the will or the restrictions which it imposed on her power or aLenation. The court, thererore, had u0 occasio!l pass an order in writing as vb .. alised in the section enabling her to dispose of any property of the minor notwithstanding the restriction imposed by the will. Section 29 says that where a person other than a Collector 9r than :1 gua.rdJan app01ut.;d by will or other instrument, has been appointed or dedared by the court to be guardian of the property of a ward, he shall not, with the prevjous permission of the court (a) mortgage of charge or transfer by sale, gift, exchange or otherW:is~, any part of the immov able property of his ward, or (b) lease any part of .that property for a term exceeding five years or for any term extending more than one year beyond the date on which the ward will cease to be a minor. As Manorama was declared by the will to be the e~utor and also guar~ dian of the minor, she could not have made an application for permis sion to mortgage under s. 29. Nor could the court have passed any order granting permission under s. 31 (2) to mortgage the immovable property of the minor. The order _sanctioning the mortgage for Rs. 30,000/- was expressly passed on an application made under s. 29. Though there is no mention in the order sanctioning the mortgage for Rs. 10,000/- of the section under which it was passed the order appears to have been made under s. 31 (2). But as already stated, the orders co.uld not have been passed under s. 31(2) on the basis of the app1ica~ tions filed under s. 29 .as Manorama was a guardian appointed by the 1vill of Raju. Mr. Tarkunde for the appellants argued that s. 3 of the Act pre serves the inherent powers of certain High Courts to appoint a guardian and determine his powers and to sanction any alienation by the guar~ dian of the properties of the ward, apart from the provisions of the Act. He cited In re Mahadev Krishna Rupji(l) and The Raja oj Vizi'anagaram v. The Secretary of State for India in Counci/( 2 ) and said that the High Court of Madras had inherent jurisdiction to ap point a guardiap and determine his powers untrammelled by the pro· visions of the Act. In the first of t1J.e cases above referred to, it was held by the Bombay High Court that though the Act does not sanction the appointment of a guardian in .respect of undivided share of a minor in a ioint Hindu Family, the High Court of Bombay had inherent power to appoint a guardian. In the latter case. the Madras High Court held that the High Court has, under clause 17 of the Letters Patent, 1865 . resident . iurisdiction in regard to minors, thou~ not of British birth, to act outside the limits of the Presidencv-towp and its jurisdiction under that clause is not affected by the Act. The' court also· said "the jurisdiction of the High . Court under clalJSC 17 of the Letters Patent ]s not in the exercise of its ordinary ori~inal civil jurisdiction and it saved by s. 3 of the Guardans and Wards Act which says that 'nothing (1) I. L. R. 1937 Born. 432. (2) J. L. R. 1937 Mad. 383, A B c D E. F G II .JAIN TEMPLE V. BARIKRISHNA (Mtll~W, J.} 44H in the Act shall be construed to take away any power possessed by any High Court established under the Statute 24 and 25 Vic. c. 104'." It does not follow from these rulings that the principle underlying s. 28 of the Act should not bind the High Court even while exercising its inherent powers. The principle underlying s. 28 is that when a guar dian is appointed under a will and his powers arc expressly restricted by that instrument, the court must be apprised of the will and of the restrictions_ on his powers imposed by the testator in order to exercise its discretion to determine whether those restrictions should be removed or not. The section enacts a salutary principle for the exercise of its parental jurisdiction. c Mr. Tarktmde said that s. 28 is applicable only to a guardian of the property of the minor, that the will of Raju declared Manorama only as guardian of the person of the minor and therefore, s. 28 was , not attracted. f The definition of the word 'guardian' in s. 4(2) of the Act says that 'guardian' means a person having the care of the person of a minor In the matter or h1s property, or of both bis person and property. of Sirsh Cha.;der Singh and Others (I) the court said that the question whether a person is appointed guardian of the person of the .. minor alone but of his property also must be determined on a perusal of the entire document appointing him. If powers of managing the properties of the minor are vested in a guardial] and express restrictions are plac ed on his powers of alienation in the course of the management, that is an indication that the appointment is as guardian of the property also. Manorama was given power under the will to manage the pro parties of the minor. The fact that restrictions have been imposed by the will on her powers of alienation of the properties of the minor seem~ to us a rather sure indication that Manorama was appointed guardian of the properties of the minor also. To what purpOSe were the restrictions imposed unless she was also appointed guardian of the properties ? Section 28 no doubt comes under the heading "Guardian of property". But we are not sure that from that fact we can infer that s. 28 contemplates only the case of a guardian of the property of the minor. However, we express no opinion on the question as that is unnecessary. We proceed on the assumption that the section only ap plies to a guardian of the property of a minor. That apart, as the learned trial Judge rightly held, the orders of sanction were obtained by fraud and they were, therefore, on account bad. G Mr. Tarkunde said that the respo!ldents c~ot .raise the objection in this appeal that the orders of sanctton were mvaltd as the respon~ dents did not appeal from the decree of the High Court to recover. tb( mortgage money from. the one-half share in properties: His argument was since the respondents did not file an appeal agamst that dCC!U• they cannot be allowed to impugn the validitv of the or~er~ of sanction. on the . basis of which that deer~ was passed, and; if the orders ol 1:1 (I) 21 (1894} I. L R. Calcutta 206, 2H. 450 SUPllEME COUllT REPORTS [ 1974] 1 S.C.R. sauction aro allowed to be impugned here, that would be allowing the respondents to imperil the decree in respect of the half-share in the properties. It is no doubt true that respondents cannot be allqwed to impugn the decree passed by the High Court in favour of the appellants as they did not file any appeal from that decr~e. But we think that there is no reason wny they should not be a lowed to urge the plea that the orders of sanction were invalid when the · appellants want not only to maintain the decree passed by the High Cohrt but also to yet a decree charging the entire properties. In other words, the bar against urging the pl~a of the invalidity of the orders of sanction would apply only if the respondents seek to impugn the decree already obtai. Ded by appellants but not when the appellants seek to obtain further reliefs in the appeal on the basis of the orders. In such a case we are not aware of any rut~ of law which would preclude the respondents from urging the plea. H c In The Mantlgemenj. of Itakhoolic Tea Estate v. Its Workmen,(!) the question whether in such circumstances, a respondent who has not appealed from the decree can be allowed to urge such a plea in ans wer to a claim by an appellant for a further decree although the plea ~imperil the decree already obtained was left undecided. But the Full Deneb decision of the Madras High Court in Venkma Rao v. $Qt. yanarayantJtiuflhy(2) bas held that it is open to a respondent who had not filed cross-objection with respect to the portion of the decree which ~ aone against him "to urge in op~ition to the appeal of the plain tift. a contention which if accepted by the trial court would have n~tated the total ~ of the suit'• but that the decree in so far as it .was against him would stand. The decree of the High Court here iO 10 far as it beld that the mortgage money can be recovered only from the .half .share. in the properties was also a decree in favour of the res ~ents as it did not allow the claim of the appellants to recover it ~ fhe entire interest in the properti~. To that extent, the re8pon -lid a decree in their favour· That decree they could support on -aay of the grounds decided against them by the court which passed ~ decree. And when they do this, they are only supporting and not 8uacking that ~ee. We think that the rule laid down by the MRdras I:JiJb CoJ,lft in the, above decision is sound. And there is no reason -Why tbe respondents should be barred from urging the plea. Sl) even _ thOugh we bol4 that the power of Manorama as guardian to mortgage Jlfe properties extended to the entire interest in the properties, it would . ~.follow that the appellants would be entitled to a decree charging the entire interest in the properties as the orders of sanction on the basis of which alone Manorama got the power to alienate the properties were invalid. D E G The position that emerges from this discussion is : Under the ~ill Manorama had no power to alienate the properties. As the existence of the wiJI and the curb on her powers of alienation were not disclosed H (1) A. I. R. [1960] S.C. 1349. (2). J. L. R. [1944] Mad. 147. A B c D F G JAIN TEMPLE V. HAJWOUSHNA (Mathew, 1.) 451 to the court when she applied for sanction and as th court did not by order in writing remove the fetters on her power of alienation, the sanctions cannot be regarded ~ having been obtained under s. 28; nor could· the sanctions, as they were given under S. 31(2) on the applications filed under s. 29, be regarded as valid, as s. 29 has no application when there is a will appointing a person as guardian. The question then is whether the appellants ar~ entitled to get the money advanced under the mortgages as a charge· on the entire interest ill these properties. The appellants advanced the amounts bona fide believing th«t the.re was necessity on the strength of the orders of sanction and there is no finding that there was no nece.ssity. These orders were not void, even though they were obtained by fraud. That Wl,\8 the view of Balakrishna A yyar, J. and it was on the basis that the orders Were voidable, and that, until set aside, they were valid, that the learned Judge granted a decree. A disposal of property· in contravention of the provisions of s. 28 or s. 29 is only voidable (see s. 30). We think that there is no reason why, when in defence to the claim by the appellants for a decree charging the entire interest in the pro perties, in the apeal, the respondents shomd not be allowed to show that the order<: of sanction were that they .. were not· set aside in a suit instituted by the 2nd res If the court were to refuse to pass a decree allowing the pondent. appellants to recover the money on the rest of the minor's interest in the properties, the basis of that refusal would be on a ground destructive of the decree passed by the High Court. In other words, the High Court granted the 9eeree on the basis that the orders cf sanction for mortgaging the properties were valid. If we are to refuse to pass a decree for recovery of the mortgage money from the entire interest of the minor in these properties, on the ground that the orders sanctioning the mortgages were inv~d, that would be con tradictory to the finding of the High Court on the basis of which it passed the decree. Order 41, rule 33 of the Civil Procedure Code clothes the appellate court with the power to pass any decree or order which the trial court ought to have passed or made and pass or make such further or other. decree or order as the justice of the case may require. invalid notwithstanding the Though the respondents are entitled to avoid the orders of sanction in defence without the necessity of filing a. suit, it is just and proper that as a condition for doing no, they must give resti tution. The High Courts in this country have taken the view. and we think rightly, that as condition for setting aside a disposa! of .imm~v- · a.ble property made in contravention of s. 28 or. s. ~9 whtch 1s votd able under s. 30 it is just that there must be restttution of thP benefits [See Parshotam Das v. Nazir Hmaln~ 1 ), Per~a Karuppa'! received Chetty v. Kandasamy Chetty( 2 ), Abbas Husam v. Kzran Sha.shr Devi(3 ).] (2) 1933 Mad. W. N. 791. (1) 54 I. C. 846. (3) A. r. R. 1942 Nag. 12. SUPREME cOURT RI!P<lllTS [ 1974] l S.C.It. . Jo this view, we do not think it necessary to express any optwon A QJl the . correctness or otherwise of the view of the High Court ott · the nature and effect of an otder passed unoor s. 31 (2). Stiffice it to. say .that different views have been expressed by the High Courts. · As already stated; one item· of the properties has been sold by the· Administrator-General with the sanction of the Court ·and proceeds of the sale are with him. We pass a decree against respondent-defendants directing them to pay the appellants the princi- pal amount due under the two mortgages together with 6 per cent interest from June 1; 1950 on the principal amount up to tho date of pa~nt or realization. The amount decreed will be a chargr on the sale proceeds of ette of the properties which are being retained by the Administrator-General and on the e~;~.tire in'terest in the other prope1ty under the mortgages. 8 C Tbe deer~ of the High Court is set aside and a pecree in term~ tl' their costs hen:. as at'oraaid is passed. The appeal is allowed in the manner ·and tbe extent indicated above. The parties will bear S.C. Appeal allowed. . '