http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

PETITIONER: CHATTANATHA KARAYALAR

       Vs.

RESPONDENT: RAMACHANDRA IYER AND ANOTHER.

DATE OF JUDGMENT: 19/09/1955

BENCH: AIYYAR, T.L. VENKATARAMA BENCH: AIYYAR, T.L. VENKATARAMA BOSE, VIVIAN SINHA, BHUVNESHWAR P.

CITATION:  1955 AIR  799            1955 SCR  (2) 477

ACT:    Election   Dispute-Returned  candidate  alleged   to   be disqualified  for  being chosen as  a  member--Hindu  father entering  into Government contract, if does so on behalf  of the  undivided  family-Presumption of Hindu  Law-Finding  of benami,  if liable to be interfered with in Special  appeal- Representation of the People Act (XLIII of 1951), ss.  7(d), 9(2).

HEADNOTE:   There  is  no  presumption in Hindu Law  that  a  business standing  in the name of a member of the Hindu joint  family is  joint  family  business, even when that  member  is  the manager or the father. There is this difference between the position of the  father starting  a  new business and a mere manager doing  so  that while  the debts contracted by the father in  such  business are  binding  on  the sons on the theory of  a  son’s  pious obligation  to pay his father’s -debt, those  contracted  by the latter are not binding on the other 478 members of the family unless, at least, it can be shown that the starting of the business was necessary. Ram  Nath  v.  Chiranii Lal, ([1934] I.L.R.  57  All.  605), Chhotey Lal Chaudhury v. Dalip Narain Singh, ([1938]  I.L.R. 17  Patna 386), Hayat Ali Shah v. Nem Chand  (A.I.R.  [1946] Lah. 169), referred to. But  this  distinctive position of the father  does  not  by itself make the new business started by him a joint business of the undivided family.  The  question  of benami is a question of  fact  and  where there  is evidence to support a finding that a person  is  a benamidar for another, the Supreme Court in a Special appeal will not interfere with it.   Consequently,  in a case where an election was  challenged on the ground that the candidate returned was interested  in a contract entered into by his father, benami in the name of another,   with  the  Government  for  felling   trees   and transporting  timber and as such disqualified to  stand  for election   under   s.  7(d)  read  with  s.  9(2)   of   the Representation of the People Act and the Tribunal -found  on

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

evidence that the father was the real contracting party  but without  considering the evidence on the other point  which, if  believed,  might sustain a finding that the  father  was meting on behalf of the family, presumed as a matter of  law that  the ion had interest in the contract and declared  the election void, Held,  that the Tribunal took an erroneous view of  the  law and  made a wrong presumption, so its decision must  be  set aside,  and as the findings are not sufficient for  disposal of  the matter the case must be remitted back for  rehearing on the evidence on record.

JUDGMENT:    CIVIL  APPELLATE  JURISDICTION: Civil Appeal No.  136  of 1965. Appeal  by Special Leave from the Judgment and  Order  dated the  15th  November 1954 of the Election  Tribunal,  Quilon, Travancore-Cochin, in Election Petition No. 18 of 1954. S.   Mohan  Kumara  Mangalam,  H. J.  Umrigar  and  Rajinder Narain, for the appellant. T. R. Balakrishnan, for respondent No. 1. 1955.   September  19.   The  Judgment  of  the  Court   was delivered by VENKATARAMA  AYYAR  J. -This is an appeal by  special  leave against the order of the Election Tribunal, Quilon declaring the election of the appellant to the Legislative Assembly of the State of Travancore- 479 Cochin  from the Shencottah Constituency void on the  ground that he was disqualified to stand for election under section 7(d) read with section 9(2) of Act No. XLIII of 1951.    Under  section 7(d), a person is disqualified  for  being chosen  as a member of the Legislative Assembly of a  State, if he is interested in any contract for the supply of  goods or for the execution of any works for the Government of that State.  Section 9(2) declares that if any such contract  has been  entered  into  by or on behalf of  a  Hindu  undivided family,  every  member  thereof  shall  be  subject  to  the disqualification mentioned in section 7(d); but that if  the contract  has been entered into by a member of an  undivided family carrying on a separate business in the course of such business,  other  members of the family having no  share  or interest  in that business shall not be  disqualified  under section 7(d).    The contract in the present case was for felling trees in a  Government forest and transporting them for  delivery  at the places specified therein.  There is now no dispute  that this  contract is one that falls within section 7(d) of  the Act.   The  point  in  controversy  is  simply  whether  the contract  with the Government was entered into on behalf  of the  joint family, of which the appellant is a member.   The agreement  stands in the name of one  Kuppuswami  Karayalar, and  the allegations in the petition are that he is  a  mere name-lender  for  one  Krishnaswami Karayalar,  who  is  the manager  of  a joint family consisting of  himself  and  his sons,  the appellant being one of them, and that he  entered into  the  contract  in question on behalf of  and  for  the benefit of the joint family.  The case of the appellant,  on the other hand, is that Kuppuswami whose name appears in the contract  was  the person solely entitled  to  the  benefits thereof,  that  he was not a  name-lender  for  Krishnaswami Karayalar, and that further neither he nor the joint  family had any interest in the contract.  Certain other pleas  were

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

also put forward by him, but they are not now material. 61 480 The following issues were framed on the above con- tentions: "  (2) Is the said joint family the owner of the  right  and benefits  of  the contract for the felling  and  removal  of timber from Coupe No. 4, Nedumangad Taluq, entered into with the  Forest  Department, Travancore-Cochin State?   Has  the joint family -any interest in the said contract?  (3) Is  Mr. Kuppuswami Karayalar whose name appears as  the contractor only a name-lender for the joint Hindu family  of which the respondent is a member?"  On issue 3, the Tribunal found that Krishnaswami  Karayalar was  the real contracting party, and that Kuppuswami  was  a benamidar  for  him, and on issue 2, that the  contract  was entered  into  on behalf of the joint family, of  which  the appellant was a member.  On these findings, it held that the appellant  was  disqualified under section  7(d)  read  with section 9(2), and declared his election void.  The appellant questions  the  correctness  of this order  firstly  on  the ground  that the finding that Kuppuswami is a benamidar  for Krishnaswami Karayalar is not warranted by the evidence, and secondly  on the ground that the finding  that  Krishnaswami entered  into the contract on behalf of the joint family  is based on a mistake of law and is unsustainable.   On   the  first  question,  Mr.  Kumaramangalam  for   the appellant  admitts that there is evidence in support of -the conclusion that Kuppuswami was a benamidar for Krishnaswami, but contends that it is meagre and worthless.  The  question whether  a  person is a benamidar or not, is purely  one  of fact,  and  a finding thereon cannot be interfered  with  in special  appeal, if there is evidence on which it  could  be based.   We  must,  therefore, accept  the  finding  of  the Tribunal  that  it  was  Krishnaswami,  the  father  of  the appellant,  who  was  the  real  contracting  party  to  the agreement with the Government.  The next question is whether Krishnaswami entered into  the contract  in his own personal capacity or as manager of  the joint family.  The Tribunal found                             481 as  a  fact  that  the  business  started  by   Krishnaswami Karayalar was a new venture, and instead of proceeding  next to  consider  on the evidence whether in entering  into  the contract  he acted for himself or for the joint  family,  it entered into a discussion whether under the Hindu law  there was  a presumption that a business started by  a  coparcener was  joint family business.  After observing that there  was no such presumption "in the case of an ordinary manager", it held that "the law is different when the manager happens  to be also the father".  It then referred to certain  decisions in which it had been held that the sons were liable for  the debts  incurred by the father for a new business started  by him,  and  held  "on the above authorities  that  the  joint family  of  the  respondent is the owner of  the  right  and benefit of the present contract".   The  appellant contends that the statement of law  by  the Tribunal  that  there is a presumption that a  new  business started by the father is joint family business is erroneous, and  that  its finding that the joint family  of  which  the appellant  was a member had an interest in the  contract  of Krishnaswami could not be supported, as it was based  solely on the view which it took of the law.  This criticism is, in our opinion, well founded.  Under the Hindu law, there is no presumption  that  a business standing in the  name  of  any

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

member  is a joint family one even when that member  is  the manager  of the family, and it makes no difference  in  this respect  that the manager is the father of the  coparceners. It  is  no doubt true that with reference to a  trade  newly started  there is this difference between the position of  a father  and  a  manager, that  while  the  debts  contracted therefor  by the former would be binding on the sons on  the theory  of  pious obligation, those incurred  by  a  manager would  not be binding on the members, unless at least  there was necessity for the starting of the trade, as to which see Ram Nath v. Chiranji Cal(1), Chotey Lai v. Dulip Narain  (2) and Hayat Ali v. Nem Chand(3).  But (1)  [1994] I.L.R. 57,All. 605.  (2) [1988] I.L.R. 17  Patna 386.                  (3) A.1,R. 1945 Lab. 169, 482 it  is  one thing to say that the sons are  liable  for  the debts contracted by the father in the trade newly started by him, and quite another thing to treat the trade itself as  a joint family concern.  We are therefore unable to accept the finding  of the Tribunal that the contract  of  Krishnaswami Karayalar should, as a matter of law, be held to be a  joint family business of himself and his sons.   This conclusion, however, is not sufficient to dispose  of the  matter.  The case of the respondent  that  Krishnaswami entered into the contract with the Government of Travancore- Cochin  on behalf of the joint family rests not merely on  a presumption  of  law  but  on  evidence  as  to  facts   and circumstances  which,  if accepted, would be  sufficient  to sustain a finding in his favour.  In the view it took of the law  on  the  question, the Tribunal  did  not  discuss  the evidence bearing on this point or record a finding  thereon. It is therefore necessary that there should be a remittal of the  case  for  ’a consideration of  this  question  on  the evidence.   The appellant contends that there is only the evidence  of the respondent in support of the plea that the contract  was entered into by Krishnaswami on behalf of the joint  family, and  that this Court could itself record a finding  thereon. But  it  is argued by the respondent that there are  in  the judgment  of the Tribunal several observations  which  would support the conclusion that the contract was entered into on behalf of the joint family.  Thus’ it is pointed out that in para   5  of  the  judgment  the  Tribunal   observes   that Krishnaswami Karayalar started this new business with a view to discharge the family debts.  It further observes in  para 6 that the business required an initial investment of  about Rs.  25,000 to Rs. 30,000, and that while there is  evidence that  about  Rs.  7,000 had been  borrowed  by  Krishnaswami Karayalar, there is no evidence bow the balance was made up. The  contention  of the respondent is that  this  must  have proceeded from the joint family funds, and that implicit  in the  finding of the Tribunal.  It is this is also  mentioned in the judgment of the Tribunal that 483 Krishnaswami  was  anxious to support his son,  the  present appellant,   and  that  many  of  the  witnesses  whom   the respondent  was obliged to examine, were really  anxious  to help  the  appellant. (Vide para 12).  We do  not,  however, desire  to express any opinion on these contentions,  as  we propose to leave them to the decision of the Tribunal.     We accordingly set aside the order of the Tribunal,  and direct  that  the Election Commission  do  reconstitute  the Tribunal   to   hear  and  decide   the   question   whether Krishnaswami  Karayalar entered into the contract  with  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

Government  of  Travancore-Cochin  on behalf  of  the  joint family  or for his own personal benefit, on a  consideration of the evidence on record.  It is made clear that no further evidence  will be allowed.  The parties will bear their  own costs in this Court.                                          Appeal allowed.                                   Case remitted for hearing.