http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 22  

PETITIONER: PRASAD & ORS.

       Vs.

RESPONDENT: V. GOVINDASWAMI MUDALIAR & ORS.

DATE OF JUDGMENT08/12/1981

BENCH: DESAI, D.A. BENCH: DESAI, D.A. MISRA, R.B. (J)

CITATION:  1982 AIR   84            1982 SCR  (2) 109  1982 SCC  (1) 185        1981 SCALE  (3)1867  CITATOR INFO :  F          1989 SC1247  (5)

ACT:      Hindu Law-Joint Hindu family-Ancestral business carried on-Karta starting  a new business-Incurring debts alienation of joint  family property  by  karta  and  his  brother  for liquidation of debts-Alienation assailed by sons-Alienation- Whether valid.      Hindu Law-Antecedent  debt-What is-Debt  whether to the antecedent  in  fact  as  well  as  in  time-Whether  to  be independent of and not part of the transaction impeached.      Hindu Law-Alienation  of joint  hindu family  property- Validity of alienation assailed-Legal necessity and adequate consideration-Proof of-Whether required.      Constitution of  India 1950, Art. 733-Findings of fact- Supreme Court-Interference by-When arises.

HEADNOTE:      The  Karta   of  a  Joint  Hindu  Family  was  in  sole management of  the entire  family affairs  and he brought up his  younger   brother.  The   ancestral   family   business (Kulachara )  was that  of tobacco  and money lending. After sometime the  Karta started  a new  business  of  lungi.  In connection with  this new  venture he  borrowed  money  from others either  on promissory notes or on the security of the family properties.  He suffered  loss in  the new  business. When  his   creditors  began  to  press  him  for  immediate discharge of  the debts  the Karta  and his brother on their behalf and  on behalf  of the  other minors  in  the  family entered into  a written agreement on 7th July, 1955 (Ext. B- 4) with  Govinda Swami Mudaliar and his two brothers whereby they agreed  to sell  their almost entire property for a sum of Rs.  14,000 to  discharge their  debts. Pursuant  to this agreement a  sale deed  was executed  on 22nd  August,  1955 (Ext. B-5)  for an enhanced consideration of Rs. 16,500. The sale deed  referred  to  the  various  debts  including  the mortgage  debts  owed  by  the  vendors  which  were  to  be discharged by  the vendees and the balance if any to be paid to the  vendors. The  vendees were  asked  to  pay  off  the mortgage debts  mentioned in  the sale  deed  in  the  first instance if  they had  no sufficient  funds to clear off all the debts.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 22  

    The sons  of the  Karta and  those of his brother filed two suits,  suit No.  107 of  1958 and  suit No. 108 of 1958 respectively challenging the sale deed dated 22nd 110 August, 1955  (Ext. B-5) and the mortgage deed of 2nd March, 1952 (Ext. B-49), and claiming partition.      In suit  No. 107 of 1958 the Karta and his brother were Defendant Nos.  1 and 2, the three minor sons of the Karta’s brother, Defendant  Nos. 3  and 5  and the vendees Defendant Nos. 6 to 8, the mortgagee, Defendant No. 9 and the official Receiver, Defendant  No. 10.  In suit  No. 108  of 1958  the three minor  sons of the Karta’s brother were the plaintiffs and the  plaintiffs and  other defendants of suit No. 107 of 1958 were impleaded as defendants.      It was  alleged in  the suits  that the  father of  the plaintiffs (Karta) started a new business of lungi which was not the  ancestral business  of  the  family,  and  that  in connection with  the new  venture he  borrowed large sums of money. He  sustained heavy  losses, and  when the mortgagees and  unsecured  creditors  started  pressing  for  immediate discharge of  the debts  he executed  first an  agreement to sell  and   then  a  registered  sale  deed  for  a  nominal consideration of Rs. 16,500 which was grossly inadequate and extremely low  considering the  extent of  the land  and the ancestral house and its market value. It was further alleged that except the two mortgages mentioned in the sale deed the other debts  shown as  consideration for the sale were false and  fictitious,  that  the  said  mortgages  were  paid  by defendants 6  to 8 out of the standing crops, and that there was absolutely  no necessity  for borrowing  the large  sums considering  the   large  income   from  the   joint  family properties.      A third  suit (suit  No. 4  of 1960)  was  filed  by  a creditor of  the Karta  and his brother against the vendees, alleging that  the Karta  had borrowed a sum of Rs. 1000 and executed a  bond for  that  amount  and  that  barring  some payments  a   substantial  amount  was  due  on  account  of principal and  interest and  that the Karta executed a sham, nominal and  fraudulent sale  deed in  respect of the family property in favour of the defendant with an intent to defeat and delay  his creditors, and that property worth Rs. 50,000 was alienated for a nominal price.      The claim  of the  plaintiffs in the suits was resisted and  contested   by  the   transferees,  alleging  that  the alienation by  the Karta was for payment of antecedent debts which were  untainted by  immorality. The father under Hindu Law possessed  a special  power  to  alienate  joint  family property including the shares of his sons for payment of his own debts  not incurred  for immoral or illegal purposes and that in  exercise of  that power  the Karta had sold all his interest and  the  interest  of  the  minor  sons,  that  an agreement of sale was first entered into and later on a sale deed was executed pursuant to the agreement for sale.      The trial  court held  that at the time of execution of the sale  deed Ext. B-5, the 4th defendant that is the Karta owed  some   creditors  in  whose  favour  he  bad  executed promissory notes  and the bond debts involved in Ext. A-7 to A-11; but  no provision  at all  had  been  made  for  these creditors either  in the  agreement of  sale or  in the sale deed. The letter by the Karta dated 27th July, 1954 (Ext. B- 54) alongwith  other oral  evidence clearly  established the intention of the Karta to defeat and delay the claim of some of the creditors in screening his property by a nominal sale in favour  of defendants  I to  3. The sale deed is true and supported by  consideration but  only partly, and that it is

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 22  

liable to be set aside wholly as 111 an imprudent  transaction. The  mortgage deed  is  true  and binding only  so far  as the  shares of  the Karta  and  his brother  are   concerned.  The   alienees  under   the  sale transaction were not entitled to any equities.      On these findings, the trial Court passed a preliminary decree for  partition and  division after  setting aside the sale transaction  the alienees  being directed  to work  out their own remedies. The alienation dated 2nd March, 1952 was declared binding  only on  the shares  of the  Karta and his brother to  the extent  of  Rs.  2,000.  The  Court  however declined to  give any relief to the alienees even in respect of the amount actually paid by them to discharge some of the debts  incurred   by  the  Karta  on  the  ground  that  the transaction had been vitiated by fraud.      The alienees  defendants preferred  appeals to the High Court but the mortgagee submitted to the judgment and decree and did  not prefer  any appeal  presumably because he could realise the  amount due  to him  by  virtue  of  the  decree granted to him,      The High Court reversed the findings of the trial court in suits  Nos. 107 and 108 of 1958 and set aside the decrees but confirmed  the finding and decree in suit No. 4 of 1960, holding that  the purchase  of  the  suit  land  was  for  a reasonable price and the consideration of Rs. 16,500 was not a grossly low price. The lungi business started by the Karta was a  new venture  and not  his family  business. The debts mentioned in  Ext. B-5  were antecedent debts from the point of view  of the  plaintiffs in suit No. 107 of 1958 and were binding on them. The debts evidenced by Exts. 13 and 14 were genuine debts  and the alienation, Ext. 5 was binding on the plaintiffs in the two suits as the sale deed was executed by their father in discharge of antecedent debts.      In the appeals to this Court it was contended on behalf of the  appellants that  the High  Court had omitted to take into consideration  various circumstances  considered by the trial court  and as  such the  findings of the High Court on material issues  were vitiated,  that the High Court omitted to consider  whether the  impugned  sale  was  an  imprudent transaction, if not fictitious. On behalf of the respondents it was  contended that  the findings  recorded by  the  High Court were  pure findings  of fact  based  on  appraisal  of evidence and this Court cannot reverse the findings recorded by the last court on facts      Allowing the appeals ^      HELD: 1.  On the  evidence both  oral, documentary  and circumstantial the trial court was right in holding that the sale deed  is true and that it is supported by consideration but only  in part and that even the recited consideration in the sale  deed is  thoroughly inadequate  and that  the sale deed was  executed only  nominally for  a collateral purpose and with a view to stave off creditors. [ 134 D]      2. The  contention of  the counsel  for the respondents that finding  of fact cannot be interfered with by the Court has no force as the finding is being 112 reversed on  the ground that material circumstances had been ignored by the High Court. [134 F]      In the instant case, there is no question of giving any equities to  the vendee  even if  some of the amount paid by the vendee  to some  of the  creditors  of  the  Karta  were genuine. [134 G]      3 The  finding that the consideration for the sale deed

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 22  

was thoroughly inadequate, is correct and the sale therefore cannot be upheld. [138 D]      4. ID  order to  uphold an  alienation of a joint Hindu family property  by the father or the manager it is not only necessary to prove that there was a legal necessity but also that the  father or the manager acted like a prudent man and a  did   not  sacrifice   the  property  for  an  inadequate consideration. [137 H-138 A]      In the  instant case, the Karta had contracted the debt in connection  with his  new personal  business and to clear all those  debts he  has executed the sale deed. The debt in question was  an antecedent  debt so  far as  his sons  were concerned, and therefore, they were under a pious obligation to pay all those debts. It was open to the father to execute a sale deed in respect of the shares of his sons also unless it was  shown that  the debt  was tainted with immorality or was for  an illegal  purpose. The  case of  the sons was not that the  debt was  contracted for  an  illegal  or  immoral purpose. The  sale would therefore be binding on the sons of the Karta.  With regard  to the sons of the Karta’s brother, the same is however not the position. In view of the factual position that  the lungi  business  was  the  individual  or private business  of the Karta it could not be said that his brother had  alienated the  joint  family  property  in  the capacity  as   father  of   his  sons  for  discharging  any antecedent debt  incurred by  him merely because he had also joined the  Karta in  executing the  sale. The  share of the sons of  the brother could not therefore have been alienated by the Karta for discharging antecedent debts. [135 E-H]      5. Ext.  B-54, an  inland letter  dated 27th July, 1954 was written  by the Karta in Telugu to Veeraswami Naidu, and is the  most important document supporting the vendors. This letter has  been relied upon by the trial Court but has been discarded by  the High Court. If this letter is proved to be genuine it  gives a  death blow  to the case of the vendees. This letter  which bore  postal stamps  could not  have been fabricated. The  observation of the High Court that it might have been written subsequently is a conjecture. No such case was even  set up  by the vendees in the written statement or in the evidence. The High Court attached undue importance to the fact  that if  Ext. 54  reached the addressee on the 4th August, 1955  then Exts.  B-20 and  B-48 could not have been prepared on the 30th July, 1955. The difficulty is solved if a reference is made to the last paragraph of the letter. The addressee was informed that they were coming to meet D.W. 12 the next day. There was, therefore nothing improbable in the preparation of  these two documents on 30th July, 1955. [123 B-C, 126 A, 125 H, 126 B-C]      6. The  observation of the High Court that there was no necessity for  the Karta  and  his  brother  to  bring  into existence fictitious  promissory notes  in favour  of D.W. 3 and D.W.  12 as  they could  have easily mentioned the other undisputed 113 debts  owed   by  them   to  support   the  recital  of  the consideration in  the sale  deed, A  also does not hold good because there  is ample  evidence on  record to  warrant the conclusion that  the promissory  notes in favour of W. 3 and D.W. 12,  were fictitious.  Most of  the debts  have neither been referred  lo in  the deed  of agreement for sale nor in the sale  deed and  it was  purposely done. If the aforesaid circumstances had  been taken  into consideration  the  High Court could  have had  no difficulty in accepting Ext. 54 as genuine. [126 G-127 A]      In the  instant case, the new business of lungi started

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 22  

by the  Karta ended  in a  loss. There was pressure from the creditors for  the discharge of the debts. As a prudent man, he would  have liked  to save  his property to the extent he possibly could  and pay  off the  various debts  incurred by him. Curiously  enough the  Karta and  his brother sold away the entire landed property of about 47 acres, leaving behind only an  acre, and  a house, owned by the joint family for a petty sum  of Rs.  16,500. Out of the total consideration of Rs. 16,500  the vendees  were asked to discharge the various debts. All the debts incurred by the Karta were not shown in Ext. B-S and Ext. B-4 the deed of agreement. [127 C-D]      7. The stipulation in the sale deed that the vendee pay off only  the secured debts and clear off the other ordinary debts at  their leisure  itself indicates  that there was no anxiety on  the part  of the  vendors to  clear of  all  the debts. It  is also  not clear  why the  vendors should adopt such an  attitude. These circumstances speak for themselves. They indicate  that  the  vendees  persuaded  the  Karta  to execute a  sale deed  of almost  his entire  family property under the  pretext of assistance to him with the stipulation that they  would re-convey the property to the vendors after the pressure from the creditors was over. [128 C-E]      8(i) The  legal position  under the Hindu Law about the pious liability  of the  sons to  discharge  the  antecedent debts of  the father is quite clear. A natural guardian of a Hindu minor  has power  in the  management of  his estate to mortgage or  sell part  thereof in  case of necessity or for the benefit of the estate. If the alienee does not prove any legal  necessity   or  that  he  does  not  made  reasonable enquiries, the  sale is  invalid. But  the father in a joint Hindu Family  may sell or mortgage the joint family property including the  sons’ interest  therein to  discharge a  debt contracted by  him for  his own  personal benefit  and  such alienation  binds  the  sons  provided:  (a)  the  debt  was antecedent to  the alienation,  and (b)  it was not incurred for  any  immoral  purpose.  (ii)  "Antecedent"  debt  means antecedent in  fact as  well as  in time.  The debt  must be independent of  and not  part of the transactions impeached. The debt  may be  a deb; incurred In connection with a trade started by  the father.  The father  alone can  alienate the sons’ share  in the  case of  joint family. The privilege of alienating the whole of joint family property for payment of an antecedent  debt is  a  privilege  only  of  the  father, grandfather and  great grandfather  qua the  son or grandson only. No  other person has any such privilege. [134 H-135 B, D-E]      Sidheshwar Mukherjee v. Bhubneshwar Prasad Narain Singh and Ors.  [1954] SCR  177; Brij  Narain v. Mangla Prasad and ors, L.R.  51 I.A.  129. Shanmukam  v.  Nachu  Ammal  A.I.R. (1937) Mad.  140; Dudh  Nath v. Sat Narain Ram A.I.R. (1966) All. 315, referred to. 114      The validity  of an  alienation made  to  discharge  an antecedent debt  rests upon  the pious  duty of  the son  to discharge his  father’s debt  not tainted  with  immorality. [135 C]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION : Civil Appeal Nos. 1102- 1103 of 1970.      Appeals by  certificate from  the judgment  and  Decree dated 6th  November, 1968  of the Madras High Court in A. S. Nos. 534 of 1961 and 165 of 1962.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 22  

    T.S. Krishnamurthy  Iyer, Gopal  Subramaniam  and  Mrs. Gopala krishnan for the Appellants.      Vepa P. Sarathy, Naresh Sharma and Vineet Kumar for the Respondents.      The Judgment of the Court was delivered by      MISRA  J.   The  present  appeals  by  certificate  are directed against  the judgment  dated 6th  November, 1968 of the Madras High Court.      The dispute  between the  parties centres  around 48.70 acres  of  land,  partly  wet  and  partly  dry  in  village Pichanur, Gudiyattam  Taluk, North  Arcot District  and  one house in  Gudiyattam town.  Admittedly the  said  properties belonged to  one Varadayya  Chetty. He  had two  sons, K. V. Purushotham and  K. V.  Sriramalu. K.V.  Purushotham in  his turn had four sons while K.V. Sriramulu had three sons. They constituted a  joint Hindu  family.  The  family  owned  and possessed 48.70  acres of  land and three houses. Vara dayya Chetty died  about 30  years prior to the institution of the suits giving rise to these appeals. At the time of his death his eldest  son K.  V. Purushotham  was the  only adult male member, the  other son,  K.V. Sriramulu being only 4-5 years old. Purushotham  thus came  into the sole management of the entire family  affairs and he brought up his younger brother Sriramalu. Their  ancestral family  business (Kulachera) was that of tobacco and money lending.      It appears  that immediately after the second world war Purushotham started  a new  business of lungi. In connection with his new venture he borrowed money from others either on promissory  notes   or  on   the  security   of  the  family properties. He,  however, suffered  loss in  that  business. When his creditors began to press for imme- 115 diate discharge  of the  debts, K.  V. Purushotham  and  his brother K.V.  Sriramalu on  their behalf  and on  behalf  of other minors  in the family entered into an agreement on 7th July, 1955  with V.  Govindaswami Mudaliar  and V.  Nataraja Mudaliar, sons  of Vadinankuppam  Venugopala Mudaliar.  This agreement was  evidenced by  a writing,  Ext. 4.  Under  the agreement K.  V. Purushotham and K.V. Sriramulu were to sell their entire property, except one acre of land, and a house, to Mudaliar  brothers for  a sum  of Rs. 14,000 to discharge their debts.  They received  a sum  of Rs.  500  by  way  of advance and  the balance of Rs. 13,500 was to be paid within two months.  It was  further stipulated  that  in  case  the vendees defaulted  they would lose the advance money, on the other hand  if the  vendors defaulted they would have to pay to the vendees a liquidated damage of Rs. 2000.      Pursuant to  the aforesaid  agreement, a  sale deed was executed on  22nd of  August, 1955  marked Ext.  B-5 for  an enhanced consideration of Rs. 16,500. The sale deed referred to various  debts owed  by the  vendors  which  were  to  be discharged by the vendees and the balance, if any, was to be paid to  the vendors. The recital in the sale deed indicates that Rs.  250 was paid in cash to the vendors at the time of the execution  of the  sale  deed.  The  sale  deed  further recites that  the vendors have not shown the exact amount of debts which  the vendees  have agreed  to pay.  The  amounts specified  therein  are  only  approximate.  The  sale  deed further authorised  the vendees  to discharge  the  mortgage debts mentioned  in the  sale deed in the first instance, if they had  no sufficient  funds to clear off all the debts at one time and clear off the ordinary debts later.      The validity of the aforesaid sale deed, Ext. B-5 dated 22nd August, 1955 and a mortgage deed Ext. B-49 in favour of A. M.  Vasudeva Mudaliar  had been challenged by the sons of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 22  

K.V. Purushotham  and K.V.  Sriramalu  respectively  by  two suits: Suit  No. 107 of 1958 and Suit No. 108 of 1958. There was yet another suit by one of the creditors, M.V. Chinnappa Mudaliar for  annulment  of  the  said  sale.  As  mentioned earlier, the  original sui:  No.107 of 1958 was filed by the four  sons   of  Purushotham   impleading  Purushotham   and Sriramulu as defendants Nos. 1 and 2 and three minor sons of Sriramulu as  defendants Nos.  3 to 5 under the guardianship of their  mother; V.  Govindaswami  Mudaliar,  V.  Shanmugha Mudaliar, and  V. Nataraja  Mudaliar, the  three vendees  as defendants Nos.  6  to  8  in  suit  No.  107  of  1958  and defendants Nos.  8 to  10 in  suit No.  108  of  1958;  A.M. Vasudeva Mudaliar, defendant No. 9 116 and the  official Receiver  of the  North Arcot  District as defendant No. 10.      Suit No.  108 of 1958 was filed by the three minor sons of  Sriramulu.   The  plaintiffs  and  other  defendants  of original suit  No. 107  of 1958 were impleaded as defendants in this  suit. The  relief claimed  in these  suits was  for partition after  setting aside  the sale  deed dated 22nd of August, 1955,  Ext. B-5  and the  mortgage deed Ext. B-40 in favour of  A.M. Vasudevan  Mudaliar. The  allegations in the plaint of  the two  suits are  on the same pattern. It will, therefore, suffice  to refer to the allegations made in suit No. 107 of 1958.      It is alleged in the plaint that the ancestral property of the family consisted of 48 acres and 70 cents of land and three houses  detailed in  Schedules and  to the plaint. The said land fell in two blocks, one consisting of 43 acres, 21 cents and  the other  of 5  acres 49  cents. There  were two wells in  the first  block and one well in the second block. There were  two pump-sets  with electric motors installed in the two wells in the first block at a cost of Rs. 3000 each. The net  cultivation yield  from the  land in any case would not be  less than  Rs. 6000  per year  which was  more  than sufficient for  the maintenance  of the  family leaving even some surplus.  The father  of the  plaintiffs started  a new business of  lungi which was not the business ’Kulachara’ of the family.  In connection  with the  new venture  he had to borrow large  sums of money either on promissory notes or on the security  of the  aforesaid property.  In course  of the said business  Purushotham sustained  a heavy loss. When the mortgagees and  unsecured  creditors  started  pressing  for immediate discharge  of the  debts, defendants  6 to  8, who happened to be friends of Purushotham, induced him to create a nominal  sale of  the house and the entire land, except an acre,  in   order  to  stave  off  the  immediate  pressure. Purushotham seemed  to have  fallen in  with  the  idea  and consequently executed  first an agreement to sell and then a registered sale  deed dated  22nd  of  August,  1955  for  a nominal consideration of Rs. 16,500 in respect of the entire land in Schedule with electric pump sets, with the exception of one  acre, and a house which is item No. 1 of Schedule C. Defendants 6  to 8  represented that  they would  execute  a formal deed  of reconveyance  of the  properties  after  the pressure from  creditors was  staved off.  The sale deed was not   supported    by   consideration   and   even   recited consideration  Rs.   16,500  was   grossly  inadequate   and extremely low consi- 117 dering the  extent of  land and the house and their market A value. The  entire joint  family property was not worth less than Rs. 35,000 and its annual yield was worth more than Rs. 6,000. The  house mentioned  at item  No. l  of Schedule was

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 22  

also worth  Rs. 5,000  though the consideration for the same in the  sale deed  was only  Rs. 2,000.  Defendants l  and 2 continued in  possession of the properties sold, for about a year when  suddenly defendants Nos 6 to 8 conceived the idea of defrauding  the defendants  I and  2  and  by  force  and violence trespassed  upon the  lands and  took forcible  and unlawful possession  thereof along  with the  standing crops worth Rs.  6,000 Defendants  1 and 2 were, however, still in possession and  enjoyment of the house mentioned in item No. 1 of Schedule C. Defendants 6 to 8 were bound to deliver the possession of the land to the plaintiffs and defendants l to S together  with the mesne profits from June 1 956, the date of trespass.      It was  further alleged  that except  the two mortgages mentioned  in  the  sale  deed  the  other  debts  shown  as consideration were  false  and  fictitious.  Even  the  said mortgages were paid by defendants 6 to 8 out of the standing crops. There  was absolutely  no necessity for borrowing the large sums  considering the  large  income  from  the  joint family properties.  Even if  the alleged  debt  due  on  the promissory note executed by defendant No. I in favour of the 9th defendant was true, it was not binding on the plaintiffs to the  extent of  the cash  consideration as it was not for necessity. Defendant No. 2 joined the execution of sale deed and the mortgage deed at the behest of the 1st defendant and on misrepresentations  made by defendants Nos. 6 to 8 and in fact he  had not derived any benefit from the borrowings. As M.V.  Chinnappa   Mudaliar  had  filed  a  petition  against Purushotham, being  insolvency petition  No. 20 of 1955, and Purushotham was  adjudged insolvent so the official Receiver was impleaded as a defendant in this case.      The third  suit being  suit No.  4 of 1960 was filed by M.V. Chinnappa  Mudaliar,  a  creditor  of  defendants  K.V. Purushotham  and  K.V.  Sriramulu  against  the  vendees  V. Govindaswami  Mudaliar  and  his  two  brothers  arrayed  as defendants I  to 3. He first filed an insolvency petition in which  Purushotham  was  adjudged  as  insolvent.  The  said creditor had  approached the  official Receiver for filing a suit for  the annulment  of the  said sale  but as  official Receive} demanded  a lot  of expenses  he, therefore, sought the permission of the Insolvency Court to file suit No. 4 of 1960 himself 118 fora declaration  that the  sale deed  dated 22nd of August, 1955 executed  by Purushotham  in favour of vendees was void or voidable  at the instance of the creditors of Purushotham and for  annulment of the same. According to him Purushotham had borrowed  a sum  of Rs. 1000 from him and had executed a bond for  that  amount  on  17th  September,  1947  carrying interest at  13 annas  per cent  per  mensem.  Barring  some payments a  substantial amount  was still  due from  him  as principal and  on account of interest in the middle of 1955. Purushotham,  however,   executed  a   sham,   nominal   and fraudulent sale  deed dated  22nd August, 1955 in respect of almost all the family properties in favour of the defendants Nos. 1  to  3  with  an  intent  to  defeat  and  delay  his creditors, including the plaintiff. It was also pleaded that property worth  Rs. 50,000 was alienated for a nominal price obviously  for   discharge  of  fictitious  debts.  So,  the plaintiff claimed  a relief under section 53 of the Transfer of Property Act.      The claim  of the plaintiffs in all the three suits was resisted by  the transferees. In substance their defence was that the  alienation  by  Purushotham  was  for  payment  of antecedent debts  which  were  untainted  by  illegality  or

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 22  

immorality; that  the father under the Hindu law possessed a special power  to alienate  joint family  property including the shares  of his  sons for  payment of  his own  debts not incurred for  immoral or  illegal purposes; that in exercise of that  power he had sold all his interest and the interest of his  minor sons,  that d registered agreement of sale was entered into  on 7th  of July  1955 and  the period  of  two months was  provided for the performance of the contract and the  vendees  had  investigated  before  entering  into  the transaction; that  the transaction  was normal,  regular and bona fide  one; that  the vendees  had in  fact paid off the full consideration  applying it  for discharge of antecedent debts obtaining from several creditors vouchers for such due payment and  cancellation. A.M.  Vasudevan Mudaliar  who had been arrayed  as defendant  No. 9  in suit  No. 107  and  as defendant No.  7 in  suit No. 108 of 1958 resisted the claim of the  plaintiffs in  those suits  on the  ground that  the mortgage in  his favour  was incurred  for the  discharge of antecedent debts and for the need of the Hindu family, which was binding  upon the  members of the family. The plaintiffs in both  the suits Nos. 107 and 108 of 1958, the sons of the vendors, were bound by the said alienation. 119      The pleadings  of the  parties gave rise to a number of issues. Some  of the  issues were  common in  all the  three suits. On  the request  of the  parties all  the three suits were jointly tried.      Before the  trial commenced  a joint  memo was filed in original suit  No. 4 of 1960 whereby the parties agreed that the evidence  in original  suit No. 4 of 1960 regarding lack of consideration  for the  sale deed dated 22nd of August, l 955 and  the value of the properties, be treated as evidence in original  suit Nos. 107 and 108 of 1958. They also agreed that the  evidence regarding  the mortgage deed dated 2nd of March 1952  be treated  as common evidence for original suit Nos. 107 and 108 of 1958 After this statement by the counsel for the  parties, the  original issues  framed in  the three suits were recast and additional issues were also framed.      The Subordinate Judge came to the following conclusions in suit No. 4 of 1960:      (1)  At the time of execution of the sale deed. Ext. B-           S, the fourth defendant, that is Purushotham, owed           some creditors  in whose  favour he  had  executed           Exts. A-3,  A-4, A-12,  A-13 and  the  bond  debts           involved in  Exts. A-7  to A-11,  but no provision           had at all been made for those creditors either in           the agreement  of 3  sale Exts.  B. 4 dated 7th of           July, 1955  or in  Ext. B-5,  the sale  deed dated           22nd of August, 1955.      (2)  Ext. B-54,  the letter  written by  Purushotham in           favour of  Veerasami Naidu  dated  27th  of  July,           1’)55  along  with  other  oral  evidence  clearly           establishes the intention of Purushotham to defeat           and delay  the claim  of some  of the creditors in           screening his property by a nominal sale in favour           of defendants I to 3.      (3)  The ingredients  of section 53 (1) of the Transfer           of  Property   Act  have  been  satisfied  by  the           plaintiff in  as ( much as impugned transfers have           been made  with intent  to  defeat  or  delay  the           creditors of  the transferor.  The Court, however,           came to  the conclusion  that the suit was wrongly           framed inasmuch  as the plaintiff did not seek any           relief on  behalf of or for the benefit of all the           creditors and,  therefore, the  Court decreed  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 22  

         suit No. 4 of 1960 as against defendants 1 120           to  3,   that  is,  alienees  annulling  the  sale           transaction dated  22nd August, 1955 as fraudulent           preference under  section  54  of  the  Provincial           Insolvency Act,  insofar as  the insolvent’s share           was concerned      His conclusions  in suit  Nos. 107 and 108 of 1958 were as follows:      (1)  The value of the land and house including the pump           sets, wells  etc. comprised in Ext. B-S could have           been in  August 1955  worth anywhere  between  Rs.           35,000 to Rs. 35,000 but the same had been sold at           a grossly low and inadequate price of Rs. 16,500.      (2)  Purushotham and  Sriramulu with  the help  of Shri           Rangaswami, who  was their  friend, approached the           vendees for  help and  on  their  suggestion  they           agreed to  execute a  nominal sale  of  all  their           properties with  an understanding for reconveyance           after ten years on payment of the sums advanced by           them and  that in that connection they had thought           of executing the two bogus bonds, one in favour of           Veeraswami Naidu,  DW 12, and another in favour of           Deivasigamani   Mudaliar, DW  3 and  certain other           documents to make the sale probable.      (3)  The sale dated 22nd August, 1955 is true and it is           supported by consideration but only partly. It is,           however, liable  to be  set  aside  wholly  as  an           imprudent transaction.      (4)  The mortgage  deed dated 2nd of March 1952 is true           and  binding   only  so  far  as  shares  of  K.V.           Purushotham and Sriramulu are concerned and to the           extent of  Rs. 2000  so far  as the  plaintiffs in           original suit No. 107 of 1958 are concerned.      (5)  The alienness  under the  sale  transaction  dated           22nd of  August  1955  are  not  entitled  to  any           equities in  this suit.  But the alinee under Ext.           B. 49  would be  entitled to have his two items of           house allotted  to the  share of  K.V. Purushotham           and K.V.  Sriramulu to  work out  his equities but           this will be easily done in the final 121           decree proceedings  in original  suit No.  107  of           1958 A and 108 of 1958.      (6)  The plaintiffs  would be  entitled to past profits           from the  alienees of  the sale  transaction dated           22nd of  August, 1955  from the year 1956-57 as it           is in  evidence that  they entered  possession  in           that year. B      on  these  findings  the  Subordinate  Judge  passed  a preliminary decree  for  partition  and  division  of  their respective shares  in suit  Nos. 107 of 1958 and 108 of 1958 which was  215th and  318th respectively  in both  the suits after setting  aside the  sale  transaction  dated  22nd  of August, 1955  and directing  the alienees  to work out their remedies outside the scope of these suits and declaring that the alienation dated 2nd March, 1952 was binding only on the shares of  K.V. Purushotham  and K.V.  Sriramulu and  to the extent of  Rs. 2000.  The plaintiffs were held entitled to a decree for past profits from 1556-57 as against the alienees of the  sale transaction dated 22nd August 1955, the quantum to be  determined in  a separate enquiry in the final decree proceedings as  was agreed to by the parties under order 20, rule 12  C.P.C. The court declined to give any relief to the alienees even in respect of the amount actually paid by them

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 22  

to discharge  some of  the debts  incurred by Purushotham on the ground that the transaction has been vitiated by fraud.      The  alienees-defendants   feeling  aggrieved   by  the judgment and  decree  of  the  Subordinate  Judge  preferred appeals in  all the  three suits.  The  mortgagee  Vasudevan Mudaliar, however,  submitted to the judgment and decree and did not  prefer  any  appeal  presumably  because  he  could realise the  amount due  to him  by  virtue  of  the  decree granted to  him. The  High Court  was, therefore,  concerned only with  the validity  of the sale deed Ext. B-S in favour of the appellants.      The High Court reversed the findings of the trial court in suits  Nos. 107  and 108 of 1958 and set aside the decree passed by   the  Subordinate Judge but confirmed the finding and decree in suit No. 4 of 1960. The High Court came to the conclusion that the purchase of the suit land under Ext. B-5 was for  a reasonable  price and  the consideration  of  Rs. 16,500 mentioned  in Ext.  B-S was  not a grossly low price. The lungi  business started by Purushotham was new a venture of Purushotham  and not  his family business. His father had only a tobacco and money-lending business. The genuine 122 debts mentioned  in Ext.  B-5 were antecedent debts from the point of  view of the plaintiffs in original suit No. 107 of 1958. Therefore,  they are  binding on  them. As  the  debts evidenced by  Ext. B-13  and B-14  were  genuine  debts  the alienation, Ext.  B-5, is  clearly binding on the plaintiffs in original  suit No.  107 of  1958 as  the  sale  deed  was executed by  their father  in discharge of antecedent debts. The alienation  under Ext.  B-S can  be supported  not  only against the  plaintiffs in original suit No. 107 of 1958 but also against the plaintiffs in original suit No. 108 of 1958 as it  was made  in discharge  of antecedent  debts of their respective fathers.      On these  findings the  High Court  allowed the appeals filed by  the alienees  in suit Nos. 107 and 108 of 1955 but dismissed the  appeal filed  in suit  No.  4  of  1960.  The plaintiffs  have   now  come  in  appeal  to  challenge  the judgement of the High Court.      The contention  raised on  behalf of  the appellants is that the  High Court  has omitted to take into consideration various   circumstances    which   had   been   taken   into consideration by the trial court and as such the findings of the High  Court on  material issues  are vitiated.  The High Court further  omitted to consider whether the impugned sale was an imprudent transaction, if not fictitious. The counsel for the  respondents, on  the other  hand has contended that the findings recorded by the High Court are pure findings of fact based  on appraisal  of evidence  and this Court cannot reverse the findings recorded by the last court of facts. We have to consider the findings of the High Court in the light of the contentions raised by the parties.      The question  for consideration  in  these  appeals  is about the  genuineness  of the sale deed Ext. B-5 dated 22nd of August,  1955 executed  by Purushotham  and Sriramulu  in favour of  respondents I  to 3.  As stated  earlier the sale deed was  challenged by  the plaintiffs on grounds: (a) that it was  executed only nominally for a collateral purpose and with  a  view  to  stave  off  creditors  with  the  express understanding that  the properties sold would be re-conveyed to the  vendors after  the pressure  of  the  creditors  had subdued; (b)  that even  the recited  consideration  in  the impugned sale  deed was  grossly inadequate;  (c)  that  the debts under  the promissory  notes  Ext.B-13  in  favour  of Veeraswami Naidu  and Ext.  B-14 in  favour of Deivasigamani

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 22  

Mudaliar were fictitious.      The burden  squarely lay  on the  vendees to prove that the  impugned  sale  deed  was  valid  and  binding  on  the plaintiffs and 123 their  respective  shares.  To  discharge  this  burden  the vendees have  A produced both oral and documentary evidence. The vendors  have also  produced both  oral and  documentary evidence in support of their case.      Before dealing with the oral evidence of the parties in detail, it  is pertinent  to refer to Ext. B-54 which is the most important  document supporting  the vendors. This is an inland letter  dated ’’7th  of July,  1955 written  by  K.V. Purushotham in Telugu to Veeraswami Naidu. If this letter is proved to  be genuine  it will give a death blow to the case of the  vendees. This  letter has  been relied  upon by  the trial court  but has  been discarded  by the  High Court. As this letter  is a  revealing one  it will  be appropriate to quote the letter in extenso.                                                 "Gudiyattam,                                                     27.7.55           Letter written by Gudiyattam K.V. Purushotham with      salutations to elder brother Sri B. Veeraswami Naidu of      Mathangal village.  Here all  are keeping  good  health      with your  blessings. Please  write to me your and your      children’s welfare.           In respect of the debts due to the creditors by me      here, I  and your son-in-law T.G. Rangaswami Naidu went      to see  Vaithana Kuppam  Venugopala Mudali and his sons      V. Govindaswami Mudali and brothers and had a talk with      them in respect of the debts due by me. They said to us      that I  should execute  a sale  deed in  respect of  my      properties in their favour and that after the creditors      demands (troubles?  subside the  amount that they would      be giving  us shall  be repaid  within a  period of  10      years and  that on  such repayment  they would reconvey      property conveyed  in their  favour. As  all of us have      desired I  and  my  younger  brother  entered  into  an      agreement on  7.7.1955 agreeing  to execute  a deed  of      sale in pursuance of the talk we had.           Sale  deed   remains  to   be  executed.  In  this      connection (regard)  I and my younger brother both have      to create  some nominal  bonds fixing  up to some dates      and then set up as though these bonds were cancelled on      payments 124 being made  by those  persons and  that those items might be recited in  the sale  deed to  be executed. For resorting to this, we  all decided  and fixed you up as one such (person) in whose  favour bonds  have to be drawn up to a fixed date. If such  bonds are drawn up in favour of respectable persons like you  and if  all of  us join  together, then  the other creditors cannot  do anything.  As you  are a trusted person these could  be done  in your  favour as  stated. They  have agreed to give us great help in this matter. Further he is a very good  friend of  us. If  the amount  to which  they are entitled to,  is paid  back within 10 years, without , fail, then they  will reconvey  by way  of deed  of sale  in " our favour. They  will not  fail in  their words. All of us have decided that  a bond  should  be  executed  in  your  favour nominally fixing  up to  a particular  date for a sum of Rs. 2500. Thereafter  on some  other date  you have  to make  an endorsement of payment on the bond and return the bond after cancelling the  same. Further  I and my younger brother have executed a nominal bond for Rs. 1000 on 15.12.1954 in favour

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 22  

of C.R.  Deivasigamani too  i.e. his  junior paternal  uncle viz., V.  Govindaswami Mudali’s  mother’s sister’s  husband. Your son-in-law  T.G. Rangaswami  Naidu has  attested  as  a witness in that.      In respect of the bond in your favour, you have to send a notice  to us.  V. Govindaswami  Mudali, son  of Venugopal Mudali told  me that  such a notice is essential that should be on  record to  strengthen the  sale deed. Further, we are also told  that you should write a letter to your son-in-law T.G. Rangaswami  Naidu asking  him to make demands regarding the amount  due to  you. The main reason for doing all these is to  stop the trouble given by the other creditors to whom I owe.      Therefore, with  a view  to meet you in person, discuss and arrange  regarding the aforesaid matter, I and your son- in-law T.G.  Rangaswami Naidu are going over to your village tomorrow. You  will  have  no  difficulty  in  this  matter. Therefore, I  request that  you and  your senior  son-in-law Raghavalu Naidu  to remain  in the house. We will inform you the rest of the matters in person. 125      we request  you to  show faith or kindness towards this      poor family.           Thus with salutations. (in Telugu)                                      Sd/- K.V. Purushotham."      The reasons  which impelled  the High  Court to discard this letter  are as  follows: (I)  the author of this letter K.V. Purushotham  did not appear in the witness box; (2) the document does  not come  from a proper custody; (3) there is no  reason  why  the  letter  should  have  been  sent  from Gudiyattam to  Manthangal village  when one  could reach the latter village  from Gudiyattam within a short time by a bus or other conveyance; (4) the letter was posted on 28th July, 1955 at  5 p.m.  and reached  its destination  on 4th August 1955 as  it appears  to have  detained  at  Ranipet  in  the interval then  how did  they come  to prepare  Ext. B-20 and Ext.  B-48  even  on  30th  July  1955;  (5)  in  Ext.  B-54 Purushotham had  expressed that he would be meeting D.W. 12, Veeraswami Naidu, on the very next day and thus there was no real necessity  to  write  the  letter  Ext.  B-54;  (6)  if Purushotham  conspired  with  the  son-in-law  of  D.W.  12, Veeraswami  Naidu   to  bring   into  existence   fictitious promissory notes, it is unlikely that they would announce it in the  letter Ext.  B-54 when  they were  not sure  of  the attitude of D.W. 12, Veeraswami Naidu, unless they wanted to create evidence  for the  purpose of the case; (7) there was no necessity  for Purushotham  and Sriramulu  to bring  into existence fictitious  promissory notes  in favour of D.W. 3, Deivasigamani and  D.W. 12,  Veeraswami Naidu, as they could have easily  mentioned the  other undisputed  debts owed  by them to  support the  recitals of  consideration in the sale deed. The  counsel for  the respondents  has reiterated  the same reasons for discarding Ext. B-54.      The first  ground which weighed with the High Court for discarding the  letter Ext.  B-54 is that the author of this letter K.V.  Purushotham did  not appear  in the witness box and the  document does  not come  to  court  from  a  proper custody. No  such objection  was raised  no  behalf  of  the vendees in  the trial  court regarding  the admissibility of the letter. The evidence of D.W. 13 and D.W. 18 have clearly proved the handwriting of K.V. Purushotham in Ext. B-54. The observation of  the High  Court that  the letter  might have been written  subsequently is  conjectural one. No such case was even  set up  by the vendees in the written statement or in the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 22  

126 evidence, Exhibit  B-54 is  an  inland  letter  bearing  the postal stamps and it could not have been fabricated.      A capita]  has been made out of the delayed delivery of the letter  on 4th  August, 1955.  The letter  was posted on 28th of  July, 1955 at 5 p.m. and it reached its destination on 4th  of August, 1955. It appears to have been detained at Ranipet in  the interval.  The High Court has attached undue importance to  the fact  that if  Ext.  B.  54  reached  the addressee on  4th of  August, 1955 then how did they come to prepare Exts.  B-20 and B-48 even on the 30th of July. 1955. The difficulty is solved if we keep in mind the fact that in the last  paragraph of the letter the addressee was informed that they were all coming to meet him (D.W. 12) at his place the next  day. If  in accordance  with the  recital  of  the letter Purushotham  had reached  the next  day, the  29th of July, 1955,  there was nothing improbable in the preparation of the two documents on 30th July, 1955.      There is  a slight  inconsistency in the evidence of W. 12 when  he says that only on the receipt of Ext. B-54 other documents were  prepared. But the evidence of D.W. 12, which otherwise appears  to be natural, cannot be discarded merely on this slight inconsistency.      The other  reason which  has appealed to the High Court for believing  Ext. B-54  is that if Purushotham was to meet Veeraswami Naidu  the very  next day, then there was no real necessity to  write the  letter Ext.  B-54. It  could not be expected that  the letter  would be so unduly delayed and if Purushotham has  taken precaution  by writing  a letter  and also by  going to  his place  it cannot  detract from  p the value of Ext. B-54.      The observation  of the  High Court  that there was’ no necessity  for  Purushotham  and  Sriramulu  to  bring  into existence fictitious  promissory notes  in favour of D.W. 3, Devasigamani and  D.W. 12,  Veeraswami Naidu  as they  could have easily  mentioned the;  other undisputed  debts owed by them to support the recital of the consideration in the sale deed, also  does not hold good in as much as’ there is ample evidence on  the record  to warrant  the conclusion that the promissory notes  in favour of D.W. 3, Devasigamani and D.W. 12, Veeraswami Naidu were fictitious. Most of the debts have neither been  referred to  in the deed of agreement for sale nor in the sale deed and it was purposely- done. 127      If the  High Court  had taken  into  consideration  the aforesaid tell-  tale circumstances there would have been no difficulty in accepting Ext. B-54 as genuine.      The circumstances  which should  have been  taken  into consideration  by   the  High  Court  before  reversing  the findings recorded by the trial court are as follows.      Tn connection  with the  lungi business started by K.V. Purushotham he  had to  borrow money from various creditors. When the  new business  of lungi  ended in  loss  there  was pressure from  the creditors for the discharge of the debts. k. V.  Purushotham was  thus in a tight corner. As a prudent man, he  would have liked to save his property to the extent he possibly  could and pay off the various debts incurred by him. Curiously enough Purushotham and his brother. Stiramulu sold away  the entire  landed property of about 47 acres and odd, leaving  behind only an acre, and a house, owned by the joint family  for a  paltry sum  of Rs. 16,500. out of n the total consideration  of Rs. 16,500 the vendees were asked to discharge the  various debts mentioned in Ext. B-5, the sale deed. On  an examination  of the sale deed, Ext. B-S as well as the  deed of  agreement Ext.  B-4, it is a clear that all

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 22  

the debts  incurred by  Purushotham were  not shown in those deeds. Ext.  B-4 detailed only two mortgage debts while Ext. B-S specified  five items  of debts.  Admittedly there  were other debts  also incurred  by K.V.  Purushotham. It  passes one’s comprehension  why would  K  V.  Purushotham  and  his brother Sriramulu sell away the entire landed property of 47 acres leaving  behind only  one acre,  and a  house, without making a  provision for the discharge of all the outstanding debts. Not  only that,  there was  a stipulation in the sale deed Ext. B-5 that the vendees may first pay debts under the mortgage if  the vendees  had no  money to discharge all the debts at one and the same time and to clear off the ordinary debts at a later date.      What was the earthly reason for executing the sale deed of almost  all  the  property  owned  by  the  family  ?  [f Purushotham wanted  to save his reputation by paying off all the creditors then there should have been provision made for discharge of  all the  debts and  at least  they should have been specified  either in  the agreement  to sell  or in the sale deed,  Ext. B-5.  Admittedly  there  were  other  debts besides the debts specified in the sale deed, Ext. B-5. K.V. Purushotham owed to other creditors in whose 128 favour he  had executed promissory notes Ext. A-3, A-4, A-12 and A-13,  and bond debts involved in Exts. A-7 to A-l l but these debts  have not  been shown either in Ext. B-4 or Ext. B-5 specially  when the  debts were  to be discharged by the vendees under  the terms  of the  sale deed  as part  of the consideration. If  almost the  entire property  of the joint family was  to be  sold for  the discharge of his debts, and yet a  substantial part  of the  debt remains  undischarged, there was  no positive  gain to  the vendors in disposing of almost the entire property of the joint family.      The stipulations  in the  sale deed  that  the  vendees might pay  off only the secured debts and clear of the other ordinary debts  at their leisure itself indicates that there was no  anxiety on  the part  of the vendors to clear of all the debts.  It does  not stand  to  reason  why  should  the vendors adopt  such an  attitude. These  circumstances speak for themselves.      If  we  consider  Ext.  B-54  in  the  light  of  these circumstances, the letter appears to be a sequel to what has been agreed upon between K.V. Purushotham and the vendees or their father. Tho vendees persuaded Purushotham to execute a sale deed  of almost  his entire  family property  under the pretext of  assistance to him with the stipulation that they would re-convey  the  property  to  the  vendors  after  the pressure from  the creditors  was over. This can be the only reason why  the vendors would agree to dispose of the entire joint family  property for  a paltry  consideration  of  Rs. 16,500 out  of which  only Rs. 500 by way of advance and Rs. 250 at the time of execution of the sale went to the vendors according to  the recital  in  the  sale  deed  itself.  The balance of  the sale  consideration is  alleged to have been used by  the vendees  for paying  off some of the creditors. The attempt  on behalf  of the vendees has been to show that they persuaded the creditors either to forgo the interest or to reduce the principal amount and thus they had cleared off the dues  of the  various creditors.  In poof  of this  they tried to  file the  receipts and vouchers from the creditors most of  which have  been attested  by the vendees’ own kith and kin.  Some of  the documents which have been attested by these witnesses,  have been  belied by  D.W. 12  at least in respect of  Ext. B-13.  He clearly admitted that Purushotham never borrowed any amount from him nor did he pay any amount

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 22  

towards any  loan to  him. He  has given the full account of how Govindaswami Mudaliar and some other persons came to the mango thope  of his son-in-law and met him there. They asked him to sign the endorsement of discharge in 129 Ext. B-13.  At first  he protested  and refused  but on  the assurance of other persons who were there he had to sign the document on  their persuasion  on the  ground that they were setting up  these documents  in connection  with a sale. The same position  has been  admitted by  even Rangaswami Naidu, D.W. 18.      It is  true that  purushotham, the author of the letter himself has  not come  to the witness box but the letter has been proved  by the  addressee himself,  D.W. 12, Veeraswami Naidu. He  also identified  Exts. B-48  and B-48  A, the two cards containing  his  signatures,  one  addressed  to  K.V. Purushotham and  the other  to his  brother, K.V. Sriramulu. But he  admitted that  he had signed those postcards without knowing their  contents. This  gives a  clue how the vendees have been  out to  get attestations  of the  endorsements of discharge from creditors in respect of got up documents. The High Court  has attached  undue importance  to the fact that Ext. B-54  has not  come to  the Court  from proper custody, that is, it should have come to the court through Veeraswami Naidu but  instead it  was produced  by his son-in-law, D.W. 18. Keeping  in view  the  relationship  between  Veeraswami Naidu and  his son-in-law,  the production  of the letter by his son-in-law  cannot  be  said  to  be  from  an  improper custody. His two sons-in-law have also appeared as witnesses as D.  W. 13 and D.W. 18. D.W. 13, Rajavelu, deposed that on the day  Ext. B-54  was received  by D.W. 12 he was present. According to  him on  that  day  Govindaswami  Mudaliar  and Purushotham came  to their  place and  Purushotham  informed Veeraswami, his  father-in-law that  as a support for a sale deed they  had got  up a bond in his favour. He dittoes what has been  said by  Veeraswami Naidu.  The other  son-in-law, Rangaswami Naidu, D.W. 18, also appeared as witness. He owns land adjacent  to the  suit land.  He also  deposed that the bond debt  mentioned in  Ext. B-S  in favour  of D.W. 12 and the bond debt in favour of D.W. 3, Deivasigamani were got up ones. He  also identified  Ext. B-54  as a letter written by Purushotham to his father-in-law, Veeraswami Naidu.      The various  other reasons  given by the High Court for recording Ext.  B-54 are  only flimsy  and the circumstances enumerated above  make the  letter Ext. B-54 a plausible and natural letter.  An adverse  inference could have been drawn for non-appearance  of Purushotham but the other evidence in the circumstances  in our  opinion warrant  the  conclusions drawn by  the trial  court  and  we  choose  to  accept  the findings of the trial court, 130      This  leads  us  to  the  other  oral  and  documentary evidence.      The vendees  have produced  seven witnesses besides one of them  as D.W.  1.  Govindaswami  Mudaliar,  D.W.  1,  has substantiated the  case set  up  by  the  vendees  in  their written statement  He, however,  for the  first time deposed that the family business of the vendors has been weaving and lungi, although  this was not their case even in the written statement. He  deposed that  after the sale the vendees took possessions of  the land  and the  house and later on leased out the  land to  Deivasigamani vide Ext. B-37, on an annual rent of  Rs. 1400  and the house on a monthly rent of Rs. 12 vide Ext.  B-41 and  that from  the  time  of  purchase  the vendees have  been paying  the kists  and taxes for the land

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 22  

and the house.      The other  Witnesses produced  by the vendees are Ratna Mudaliar, D.W.  2. Deivasigamani  Mudaliar, D.W. 3, G. Rajan D.W. 4,  Govindappa Mudaliar,  D.W. 2.  Vasudevan  Mudaliar, D.W. 6, Punyakoti Chettiar, D.W. 7 and V C. Manivannan, D.W. 8. Ratna  Mudaliar D.W. 2, lives only three houses away from the house  of Venugopal  Mudaliar. He  had attested Ext. B-4 and Ext  B-5 and  also the endorsement of discharge in Exts. B-9,  B-14,   B-15  and  B-17.  He  had  also  attested  the endorsement in  Ext. B-37 and Ext. B-41. It was suggested to him that  his signatures  had been taken on the documents he had attested  at a  later date. He denied this suggestion He could not,  however, describe  the circumstances under which the endorsement  to the  discharge in  Ext. B-9  come to  be written. He  was so  intimate with  the vendees  that he was asked to attest so many documents but he evaded to reply the question whether  Deivasiyamani was  employed in the shop of Govindaswanmi Mudaliar  whether  Deivasigamani  himself  has admitted that he was in the service of D.W.1.      Deivasigamani Mudaliar,  D.W. 3, has also attested Ext. B-5 and  the endorsement  of  charge in Ext. 9 and Ext.B.13. He is  also an attestator of the endorsement of discharge in Ext. B-13.  He has  admitted that  he was related to D.W. 1, the  vendee,  and  also  that  he  was  in  the  service  of Govindaswami Mudaliar  five years  back as  his Gumastha. He also admits  that he  had taken  certain lands on lease from the vendees.  He appears  to have  been present  on each and every crucial occasion for attesting the documents. He being a close  relation and  also a servant of defendant No. 1, he is bound to echo the voice of his master. 131      G. Rajan, D.W. 4, attested the endorsement of discharge in A  Ext. B-13,  which was  a promissory  note executed  in favour of Veeraswami Naidu. He admitted in cross-examination that he  used to call on D.W. 1 off and on and he happens to be his  friend. His  evidence also gives the impression that he has come to oblige D.W. 1.      Govindappa Mudaliar, D.W. 5, has attested Exts. B-4 and B-5 and  the endorsement  of discharge of a bond Ext. B-9 to Sambayya Chetty.  He admitted  that he was a regular visitor to the  house of  D.W. 1.  He  used  to  go  there  to  read newspapers. He  is also  at the  house of  D.W. I on crucial occasions reading newspapers.      Vasudevan Mudaliar,  D.W.  6,  has  deposed  that  K.V. Purushotham and  K.V. Sriramulu  had borrowed money from him in 1952  and they  had mortgaged  a house  and a vacant site under Ext.  49. Exhibit  B-50 was  a prior  promissory  note executed by  K.V. Purushotham.  In renewal  of that bond and for a further advance of Rs. 2000 Ext. B-49 was executed for Rs. 4000.  He in his cross-examination that there were other big money  lenders viz., M.A. Govindaraju Chettiar, Managing Director of Rajeshwari Mills, Gudiyattam; Motiyappa Mudaliar was also  equally well-to-do  man and  had got money lending business; Rajupatti  Rajagopal Naidu  and others.  But  K.V. Purushotham had  not borrowed  any money  from any  of those persons. He  also admitted in the cross-examination that the value of  the land  within  the  radius  of  five  miles  of Gudiyattam had  risen in the course of five or six years. He further deposed  that his first cousin Vasudeva Mudaliar had purchased six  acres for Rs. 24,000 within two years. He did not deny  the suggestion  that the transaction might be four years back.  The statement  was made  on 8th of August, 1961 and about four years back would take ns to 1956-57.      Punyakoti Chettiar, D.W. 7 deposed that Purushotham and his brother  Sriramulu had  borrowed Rs.  2500 from  him and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 22  

executed a  bond Ext. B-12. They had also executed Ext. B-16 for Rs.  200.  He  further  deposed  that  at  the  time  of discharge of  Exts. B-12  and B-16 three persons had come to his place.  They were  Raju Jaicker. E.A. Ponnusami Mudaliar and  Venugopal   Mudaliar.  But   in  cross-examination   he positively  admitted   that  neither   Raju   Mudaliar   nor Devasigamani were  present at  the  time  of  discharge  and attested the endorsement in Ext. B-12. In the 132 endorsement  of  discharge,  however,  one  Raju  Naidu  had attested. He,  however, admitted  in cross-examination  that Rangasami Naidu and Ponnusami Mudaliar alone were present at the time of discharge of Ext. B-12 but neither Raju Mudaliar nor Deivasigamani Mudaliar, who have attested Ext. B-12 were present at the time of discharge.      V.C. Manivannan,  D.W. 8,  is the Secretary of the Land Mortgage Bank, Vellore. He speaks of the circumstances under which the  mortgage in  favour of  his bank  was discharged. According  to   him  Venugopal   Mudaliar,  the   father  of Govindaswami Mudaliar,  come to  the bank at the time of the discharge. He  enquired whether  the penal interest could be given up.  He represented that remission, if any, made would enure to  the benefit of Purushotham when he gets resale. He also admitted that the valuation of the property was that of the pre-war  period and after the war prices had risen three to four times.      A scrutiny  of the  evidence produced  on behalf of the vendees reveals  that the  witnesses are  interested in  the vendees and they are out to oblige them. In some cases it is even doubtful  whether the  attesting witnesses were present at the  time of  attestation. The  possibility of  obtaining their signature at a later date cannot be ruled out.      As against  the evidence  of the alienees, the evidence supporting the  vendors proves  that the properties included in the  sale deed  Ex. B-S  were worth somewhere between Rs. 40,000 to  Rs. 50,000.  The village  Munsif  and  Karnam  of Pichanur were  examined as D.W. 10 and D.W. 17 respectively. According to  D.W. 10  the land  belonging  to  the  vendors included in the sale deed has a total area of about 46 to 47 acres. They are situated in two blocks, one block consisting of 42  acres and  the other block consisting of the balance. Two electric  pumps were  existing in the block of 42 acres. He himself  owns land adjacent to the suit land owning about 40 acres.  According to him, 20 acres out of 42 acres’ block were fit for wet cultivation viz., rabi, paddy, plantain and other wet  crops could be raised, while in the dry lands dry crops like  red gram,  groundnut, horse  gram etc.  could be grown. He  further deposed  that in  1955-56 the 20 acres in which wet  crops could be raised was worth Rs. 1500 per acre while the  land in which dry crops could be raised was worth Rs. 300  to Rs. 400 per acre. According to him it would cost Rs. 2500  or more  to construct each well and Rs. 1000 or so to construct the pumping set shed. There 133 were about  300 and  odd palmyrah  trees each of which would fetch Rs.  5 or  so. Besides  there were tamarind and banian trees. One  tamarind tree  would fetch about Rs. 250 and are banian tree would fetch about Rs. 100.      He further deposed that for about a year after the sale the  vendors   alone  continued  to  be  in  possession  and thereafter  the   vendees  took  forcible  possession  which resulted in  a criminal  complaint by K.V. Purushotham. This witness is  a Village Munsif and there is no reason to doubt his veracity. He has got his own land near the land in suit.      The evidence  of D.W. 17 is also to the same effect. He

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 22  

is a  fairly aged person and Karnam of Pichanur for the past 40 years.  The Trial Court has observed in its judgment that it was  very much impressed by the demeanour of this witness which impressed the court as a person speaking the truth. He substantially supported  the evidence  of D.W.  10.  Kupayya Naidu, D.W.  11 is  the lessee of defendants I to 3. He also supports the  evidence of D.W. 10 and D.W. 17 with regard to the valuation of the property.      D.W. 14  Channgayya Naidu,  is  the  president  of  the village Panchayat  board. He  is also  an adjacent owner. He had purchased land admeasuring two acres and odd in 1958 for Rs. 4000,  Ext. 55  being the  registration copy of the sale deed. He  also speaks  of some  purchase of  3 acres and odd adjacent land in the name of his undivided brother vide Ext. B-56 in  1960 for  Rs. 9000.  He is  very positive in saying that the  land of  the vendors could be valued at Rs. 50,000 in 1955.      T.L. Narayanasami  Chowdri D.W.  15 is  the Director of Gudiyattam Taluk  Land Mortgage  Bank. He stated that he had purchased 25 to 30 acres of dry land for a sum of Rs. 56,500 under Ext. B-57 in the year 196 in the name of his undivided brother. Under  another sale  deed Ext.  B-58 dated  19th of March 1958,  13 acres and odd were purchased by them for Rs. 26,000. The land purchased under Ext. B-57 was situated only at a  distance of  one furlong  from the  suit land  and was similar to the suit land.      Anjaneyalu Naidu,  D.W. 16,  also owns land adjacent to the land  owned by  the vendors.  He also gave evidence with reference to  Exts. B-59,  B-60 and  B-61. Under  Ext.  B-59 dated 2nd  June, ]953  he had  purchased 2.77  acres for Rs. 2500 under Ext. B-60 134 dated 14th  February, 1957  he had  purchased 2.27 acres for Rs. 3,500  and under  Ext. B-61 dated 22nd June, 1960 he had purchased  3.27   acres  for  Rs.  7,000.  All  these  lands according to him were punja (dry) lands similar to the lands owned by  the vendors.  He further  deposed that in the year 1952-53 or  so the  fertile part  of the disputed land could fetch Rs.  1,500 to  Rs. 2,000  while the  punja (dry) lands could fetch Rs. 750 to Rs. 1000 per acre.      From the  aforesaid evidence it can easily be concluded that the land comprised in Ext. B-5 was fertile land capable of giving a net return of not less than Rs. 2000 to Rs. 2500 per year.  In this  state of the evidence, we agree with the conclusion drawn  by the   Trial  Court that the property in dispute was  worth Rs.  40,000 to Rs. 50,000 but it was sold only for  Rs. 16,500  which is  an  inordinately  inadequate consideration.      From  the  evidence  discussed  above,  both  oral  and documentary and  circumstantial, we  in agreement  with  the trial court  hold that  the sale  deed dated 22nd of August, 1955 is  true and  it is supported by consideration but only in part  and that even the recited consideration in the sale deed is  thoroughly  inadequate;  that  the  sale  deed  was executed only  nominally for a collateral purpose and with a view to  stave off  creditors with the express understanding that the  properties sold would be reconveyed to the vendors after the  pres sure  of the creditors had subdued; that the debts under  the promissory  notes Ext.  B-13 in  favour  of Veeraswami Naidu  and Ext.  B-14 in  favour of Deivasigamani Mudaliar were fictitious.      The contention  of the counsel for the respondents that finding of  fact cannot  be interfered with by the Court has no force as the finding is being reversed on the ground that material circumstances have been ignored by the High Court.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 22  

    In view  of the finding arrived at there is m) question of giving  any equities  to the  vendees even if some of the amounts paid  by the  vendees to  some of  the creditors  of Purushotham were  genuine. If  the transaction  of  sale  is itself vitiated  for the  reasons given  above, no relief in equity could be granted to the vendees.      Now the  question crops up about the pious liability of the sons  to discharge  the antecedent doubts of the father. The legal  position under  the Hindu  law is  quite clear. A natural  guardian   of  a  Hindu  minor  has  power  in  the management of  his estate  to  mortgage  or  sell  any  part thereof in case of necessity or for the benefit 135 Of the  estate. If  the alienee  does not  prove  any  legal necessity A  or that  he does not make reasonable enquiries, the sale is invalid.      But the  father in  a joint  Hindu family  may sell  or mortgage the  joint  family  property  including  the  sons’ interest therein  to discharge  a debt  contacted by him for his own  personal benefit and such alienation binds the sons provided (a)  the debt  was antecedent to the alienation and (b) it was not incurred for an immoral purpose. The validity of an  alienation made to discharge an antecedent debt rests upon the  pious duty  of the  son to  discharge his father’s debt not tainted with immorality.      "Antecedent debt"  means antecedent  in fact as well as in time,  that is  to say,  that  the  debt  must  be  truly independent of  and not  part of the transactions impeached. The debt  may be  a debt incurred in connection with a trade started by  the father.  The father  alone can  alienate the sons’ share  in the case of a joint family. The privilege of alienating the  whole  of  the  joint  family  property  for payment of  an antecedent  debt is the privilege only of the father, grandfather  and great-grandfather  qua the  son  or grandson only.  No other person has any such privilege. K V. Purushotham had  contracted the  debt in connection with his new personal  business and  to clear  all those debts he had executed the  impugned sale  deed. Obviously, therefore, the debt in question was antecedent debt so far as his sons were concerned and, therefore, they were under a pious obligation to pay off these debts. It was open to the father to execute a sale deed in respect of the shares of his sons also unless it was  shown that  the debt  was tainted with immorality or was for  an illegal  purpose. It is not the case of the sons of Purushotham  that the  debt was contracted for an illegal or immoral  purpose. Obviously  the sale would be binding on the sons  of Purushotham.  But the  same is not the position with regard  to the  sons of his brother, K.V. Sriramulu who were the  plaintiffs in  suit No.  108 of  1958. It has been found as  a fact  that lungi  business was the individual or private business  of Purushotham  In  view  or  the  factual position it  could not  be said that Sriramulu had alienated the joint family property in the capacity as a father of his sons for  discharging any  antecedent debt  incurred by  him merely because  he has  also joined Purushotham in executing the impugned  sale. The share of the sons of Sriramulu could not have  been alienated  by Purushotham for discharging his antecedent debt. 136      In Sidheshwar  Mukherjee v.  Bhubneshwar Prasad  Narain Singh and  ors.(l) this  Court laid  down  the  law  in  the following terms:           "A person  who has  obtained a  decree  against  a      member of a joint Hindu family for a debt due to him is      entitled to  attach and sell the interest of his debtor

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 22  

    in the  joint family  property, and if the debt was not      immoral  or  illegal,  the  interest  of  the  judgment      debtor’s sons  also in  the joint family property would      pass to  the purchaser  by such  sale even  though  the      judgment-debtor was not the Karta of the family and the      family did not consist of the father and sons only when      the decree  was obtained  against the  father  and  the      properties were sold. It is not necessary that the sons      should be  made parties  to the  suit or  the execution      proceedings.           The rule  laid down by the Privy Council in Nanomi      Babuasin’s case(2) is not restricted in its application      to cases  where the  father was  the head of the family      and in  that capacity  could represent  his sons in the      suit or execution proceedings, for subject to the right      of  the   sons  to  assert  and  prove  that  the  debt      contracted by  their father  was not  such as  would be      binding on  them under  the Hindu law, the father, even      if he  was not  the Karta  could represent  his sons as      effectively in  the sale or execution proceedings as he      could do if he was the Karta himself.      In  Brij  Narain  v.  Mangla  Prasad  and  Ors.(3)  the Judicial Committee, upon a consideration of the authorities, laid down the following propositions:           "( I  ) The  managing member  of a joint undivided      estate cannot alienate or burden the estate qua manager      except for purchases of necessity; but (2) if he is the      father, and  other members  are his  sons,  he  may  by      incurring debt,  so long  as it  is not  for an immoral      purpose, lay  the estate  open to be taken in execution      proceedings 137       upon  a decree  for payment  of that  debt. (3)  If he      purports to  burden the  estate  by  a  mortgage,  then      unless that  mortgage is  to  discharge  an  antecedent      debt, it would not bind the estate. (4) Antecedent debt      means antecedent in fact as well as in time, that is to      say, that  the debt  must be  truly independent and not      part of  the transaction  impeached. (S)  There is rule      that this  result is  affected by  the question whether      the father,  who contracted  the debt  or  burdens  the      estate, is alive or dead."      In Shanmukam  v. Nachu Ammal(1) a Division Bench of the Madras High Court laid down:           "The doctrine  of pious obligation of a son to pay      his father’s  debts cannot be restricted to cases where      father  also   happens  to  be  the  manager.  If  this      limitation was  well founded  it would also follow that      the father’s  power of disposing of the son’s share for      the satisfaction  of his  own debts  must  be  likewise      limited. There  cannot be  any justification  for  such      limitation  when   it  is  remembered  that  the  son’s      obligation to  pay his  father’s debts  was  under  the      original Smritis independent of possession of assets of      joint family  property.  It  depends  purely  upon  the      relationship of  father and son. It is only by case law      developed during  the early  part of nineteenth century      and by  statute law in the Bombay Presidency that the ’      liability of  the son for father’s debts was limited to      assets and  to joint family property. The true basis of      the obligation  therefore is the relationship of father      and son  and not  the accident  of the father being the      manager of the joint Hindu family."      There is,  however, another  condition  which  must  be satisfied before  the son  could be  held liable, i.e., that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 22  

the father  or the  manager acted like a prudent man and did not sacrifice  the property for an inadequate consideration. In Dudh Nath v. Sat Narain Ram a Full Bench of the Allahabad High Court observed:           "In order to uphold an alienation of a joint Hindu      family property  by the father or the manager it is not      only necessary  to prove that there was legal necessity      but 138      also that the father or the father or the manager acted      like a  prudent men  and did not sacrifice the property      for an  inadequate consideration.  A Hindu  father or a      manager of  a joint  Hindu family  is expected  to  act      prudently. However  great the  necessity may be, in the      joint family  property is  sacrificed for an inadequate      consideration it  would be highly imprudent transaction      and it would be a case where, though for necessity, the      father or the guardian has not acted for the benefit of      the estate  or the  members of  the joint Hindu family.      The father  or the manager is not the sole owner of the      property. In  fact until the partition takes place even      his share  does not  stand  demarcated.  The  ownership      vests in  all the  copartners taken together as a unit.      The father  and the manager, there fore, only represent      the copartners. Consequently the copartners stand bound      by the  act of  the father or the manager of the family      only to  the extent  the act  is  prudent  or  for  the      benefit of the copartners or the estate." In the  instant case  on the  finding arrived  at  that  the consideration for  the sale  deed Ext.  B-S  was  thoroughly inadequate, the sale cannot be upheld.      For the  reasons given  above the appeals must succeed. They are  accordingly allowed  and the  judgment of the High Court dated 6th November, 1968 is set aside, and that of the trial court  is restored.  In the  circumstances of the case the parties should bear their own costs. N.V.K.                                      Appeals allowed, 139