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PETITIONER: VRIDDHACHALAM PILLAI

       Vs.

RESPONDENT: CHALDEAN SYRIAN BANK LTD., ANANOTHER

DATE OF JUDGMENT: 03/12/1963

BENCH: AYYANGAR, N. RAJAGOPALA BENCH: AYYANGAR, N. RAJAGOPALA GAJENDRAGADKAR, P.B. SUBBARAO, K. WANCHOO, K.N.

CITATION:  1964 AIR 1425            1964 SCR  (5) 647  CITATOR INFO :  R          1978 SC1791  (13)

ACT: Hindu   Law-Partition-If  bonafide-Onus  of   proof-Father’s debt--Liability  of  joint family  property  for  antecedent debt-Personal  law and lex situs-Which applicable ?

HEADNOTE: Kalayanasundaram  and  the members of his family  were  per- manent residents of Palghat in the then State of Madras. and his son, the appellant, formed members of an undivided  Hind family.   The family had properties not only in Palghat  but also in Cochin. In  1945, Kalayanasundaram entered into many contracts  with the Government of India for the supply of black pepper As he had  no  ready money to implement those contracts,  he  app- roached  the  Respondent  Bank for funds  to  finance  those contract  For  that purpose, he  executed  three  promissory notes  in favour the bank for a total sum of  Rs.  1,10,000. He  also  deposited title deeds of his properties  with  the Bank  as  security.   As Kalayanasudaram  did  not  pay  the borrowed  amount, the Bank filed a suit against him on  June 17,  1948.  But even before that date, a deed  of  partition was executed on June 3, 1948 between Kalayanasundaram a  the appellant, his son, by which the properties of the family in the  Cochin  State were divided into two  equal  parts,  the father  taking over himself the liability to pay the  amount due  to  the Bank.  It was stated in the deed  of  partition that  the  debt due to the bank was a personal debt  of  the father and hence was not binding on the son. To the mortgage suit filed by the Bank, several defences  we raised.   However, the trial court decreed the suit  against the  father and there was no appeal against  that.   Against the  decision of the trial Judge that the Bank had no  right to  obtain a mortgage decree against the appellant  and  his half share in the family property an appeal was filed by the Bank which was accepted by the High Court which modified the decree  by passing a mortgage decree against  the  appellant qua his share as well.  The appellant came to this court  in appeal after obtaining a certificate of fitness.

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The  contentions raised by the appellant in this Court  were th  the finding of the High Court that the partition of  the family  properties  effected between the appellant  and  his father was not bona- fide was not justified on the  admitted facts and was based ON 648 erroneous  reasoning, that the High Court erred  in  holding that  the Hindu Law as understood and applied by the  Courts in  the previous Cochin State could determine the  liability of the appellant who was a resident of Palghat and that  the High  Court erred in holding that the mortgage evidenced  by Ex.  ’E’ was to any extent I for the discharge of antecedent debts.  Dismissing the appeals, Held:     (i)  The  finding  of  the  High  Court  that  the partition   of  family  properties  effected   between   the appellant  and  his father was not bona-fide,  was  correct. The partition deed did not set apart sufficient property for the  share of the father to enable him to discharge all  his debts.   Moreover, onus should have been placed on  the  ap- pellant  to  establish that the nature  of  the  arrangement under  the  partition was such as made proper  and  adequate provision  for the discharge of the debt, but  actually  the onus was wrongly placed on the Bank. (ii) The  view of the High Court that when the  transactions took place, British India and Cochin State were  independent sovereign states and according to Private International Law, it  was  the law of the situs of the  property  that  should govern  the contracts relating to it, was not correct.   The rule was not any statutory law which was binding on  parties who  had dealings in regard to land in that  State.   Taking the Cochin State itself, the power of a person to dispose of property  or  to encumber it depends upon whether  he  is  a Hindu, Muslim or Christian and in each case the right of the owner  to dispose of the property depends upon his  personal law as modified by any statute applicable to that  community to which he belongs.  There is no situs which can be applied irrespective  of the personal law governing the  owner.   In the  present  case,  Kalayanasundaram and  his  family  were permanent residents of Palghat.  The law applicable was  the law laid down by the Privy Council and accepted by the  Full Bench  decisions of the Madras High Court and  finally  laid down  by  the  Supreme  Court.  When  the  Bank  dealt  with Kalayanasundaram,  it must be taken to have contracted  with him  on  the  basis of such a law being  applicable  to  the transaction. (iii)     There  was a real and factual antecedency  between the  loan  of Rs. 80,000 for which the draft  was  given  on November 16, 1945, and the previously existing  indebtedness of  Rs. 1,09,000, and odd in the over drafts account  No.  1 and  2 of Kalayanasundaram to the Bank which was  discharged thereby. A  father can by incurring a debt, even though the  same  be not  for any purpose necessary or beneficial to the  family, so  long as it is not for illegal or immoral  purposes,  lay the entire joint family property including the interests  of his  sons open to be taken in execution proceedings  upon  a decree for the payment of debt.  The father can, so long  as the family continues undivided, alienate the entirety of the family property for the discharge of his antece- 649 dent  personal debts subject to their not being  illegal  or immoral.   In  other  words,  the power  of  the  father  to alienate  for satisfying his debts is co-extensive with  the right of the creditors to obtain satisfaction out of  family property  including the share of the sons in such  property.

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Where  a father purports to burden the estate by a  mortgage for purposes not necessary and beneficial to the family, the mortgage  qua  mortgage  would not be binding  on  the  sons unless the same was for the discharge of an antecedent debt. Where  there  is no antecedency, a mortgage  by  the  father would  stand in the same position as an out and out sale  by the  father of family property for a purpose not binding  on the  family under which he receives the sale price which  is utilised for his personal needs.  After the joint status  of the  family is disrupted by a partition, the father  has  no right  to deal with the family property by sale or  mortgage even  to discharge an antecedent debt, nor is the son  under any  legal or moral obligation to discharge the  post-parti- tion  debt of the father.  Antecedent debt in  this  context means  a  debt antecedent in fact as well as in  time.   The debt must be truly independent and not part of the  mortgage which  is impeached.  The prior debt must be independent  of the  debt  for  which the mortgage is created  and  the  two transactions must be dissociated in fact so that they cannot be regarded as part of the same transaction. Brij Narain v. Mangal Prasad, 51 I.A. 129, Panna Lal v. Mst. Naraini,  [1952] S.C.R. 544, Chidambara Mudaliar  v.  Rootha Perumal,   I.L.R.   27  Mad.  326  and   Vankataramayya   v. Vankataramana, 29 Mad. 200, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No.547 of 1961. Appeal  from the judgment and decree dated October 16,  1956 of the Kerala High Court in Appeal Suit No. 135 of 1953. T.N.  Subramania lyer, M.S. Narasimhan and M.S. Sastri,  for the appellant. A.V. Viswanatha sastri, T.S. Venkateswara Iyer, K.     Jayaram and R. Ganapathy Iyer, for respondent No.    1. December  3, 1963.  The Judgment of the Court was  delivered by AYYANGAR J.-This appeal is directed against the judgment  of the High Court of Kerala and has been filed on the  strength of a certificate of fitness 650 granted  by  the  High Court under  Art.  133(1)(a)  of  the Constitution. The appeal arises out of a suit filed by the  respondent-The Chaldean Syrian Bank Ltd.-which for shortness we shall refer to  as the Bank, for the recovery of certain sums due  on  a mortgage   by   deposit   of   title   deeds   executed   by Kalayanasundaram  Pillai-the  appellant’s  father  who   was impleaded as the 1st defendant and is now the 2nd respondent before us. The mortgage on which the Bank laid this suit was  evidenced by  Ex.   ’E’-a memorandum recording the  deposit  of  title deeds of certain properties in the former princely State  of Cochin.   The debt for which the said deposit was  made  was the  principal and interest due on two promissory notes  for Rs. 50,000 and Rs. 30,000 respectively which were marked  as Exs.   A  & B in the case.  It was not in dispute  that  the property  which was the subject of mortgage belonged to  the joint  family composed of the 1st defendant and his  son-the appellant.   The  appellant was a minor on the date  of  the suit-transaction  and even at the date of the suit.  To  the suit   that   it  filed  the  Bank  impleaded   not   merely Kalyanasundaram and his minor son, but the latter’s  sisters and  mother and even the lessees of the mortgaged  property. These were defendants 3 to 11.  They, however, have  dropped

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out  of  the  proceedings at earlier  stages  and  the  only -parties  to  the appeal whose rights we are  called  on  to adjudicate are the Bank and the appellant.  The Bank’s  suit was  decreed  by  the trial  court  against  the  father-Ist defendant and there was no appeal against it and that decree is  no  longer in challenge.  The trial Judge  however  held that  the  Bank  had no right to obtain  a  mortgage  decree against  the  appellant  and his half share  in  the  family property,  but  on appeal by the Bank,  the  learned  Judges allowed  the  appeal and modified the decree  by  passing  a mortgage decree against the appellant qua his share as well. It  is the correctness of this variation that is  questioned in this appeal. 651 The  execution  of the promissory notes and the  receipt  of consideration therefore as recited therein were admitted  by the  1st defendant, as also the creation of the security  by the  deposit of the title deeds of properties  and  whatever contentions  were  raised  in respect of  these  matters  on behalf of the appellant have now been abandoned.  Some point was made on behalf of the appellant regarding the suit  debt being avyavaharika, but this also has been found against and given  up.  The only question that survives is  whether  the mortgage evidenced by Ex.  ’E’ is binding on the  appellant. Here  again  it is now common ground, that the  debt  was  a personal  borrowing  by  the father,  not  for  any  purpose binding on the joint family. A few more facts have to be stated in order that the precise range  of the controversy in this appeal might  be  properly understood.   That  Kalyanasundaram and the members  of  his family were permanent residents of Palghat in the then State of  Madras that he with the appellant formed members  of  an undivided  Hindu family and that the properties  which  were the  subject of the mortgage were joint  family  properties, none   of  these  were  in  dispute  The  family   possessed properties not merely in Cochin but also in Palghat. We  shall now proceed to detail the circumstances  in  which the borrowings which has given rise to this litigation  were made.   In or about May 1945 Kalyanasundaram entered into  a contract with the Government of India for the supply of  100 tons of black pepper and also into further contracts of  the same  type  later in the year.  He had apparently  no  ready cash  to implement these contracts and approached  the  Bank for  funds for financing the undertaking.  For this  purpose he executed three promissory notes in favour of the Bank for a  total  of  Rs. 1,10,000.   The  promissory  notes  marked Exhibits A and B for Rs. 50,000 and Rs. 30,000  respectively already referred to, were executed on November 14, 1945  and the  debt  evidenced by them was secured by  a  mortgage  by deposit of 652 title-deeds  of properties in the Cochin State and  this  is the  subject-matter of the proceedings giving rise  to  this appeal.   A  few  months  later, on  February  20,  1946  he executed another promissory note which is marked as Ex.  ’C’ for  Rs.  30,000.  That also was accompanied  by  a  further deposit  of title deed which is recorded in Ex.  ’F’  ,  but that  was  in part in relation to the family  properties  in Palghat  in  the State of Madras.  As the amount  due  under these  notes was not repaid at the time promised,  the  Bank filed  the suit out of which the present appeal  arises,  in the Court of the Subordinate Judge, Chittur, which is in the Cochin  State, for a mortgage decree in its favour  for  the amount  of all the three promissory notes with the  interest due  thereon,  though  a mortgage  decree  was  sought  only

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against  the properties in Cochin which were set out in  the Schedule to the plaint. This  suit was filed on June 17, 1948 but before the  filing of  the  suit certain events happened to which it  would  be convenient  to  refer  at this stage,  because  they  figure largely  in  the defences that were raised in  the  suit  on behalf of the appellant who was represented by his mother as guardian  ad  litem.   On  March 23,  1948  a  petition  for permission to file a suit in form pauperis was filed in  the court  of the Subordinate Judge at Palghat on behalf of  the appellant  by  his uncle as his next friend.  To  that  suit were impleaded as defendants Kalyanasundaram, the father, as well  as  the mother and as many as 31  other  creditors  of Kalyanasundaram  including the respondent Bank.  The  relief sought  in the suit was the effecting of a Partition of  the family  properties situated in Palghat and for the  delivery of the half-share therein to the minor plaintiff.  With this was  coupled  a  prayer for the  setting  aside  of  certain decrees which had been obtained by certain of the  creditors who were impleaded as defendants, on the ground either  that the promissory notes or other documents on which the decrees had been passed were not supported by consideration, or that these debts were tainted with illegality or immorality,  the allegation being that 653 the  father was leading a reckless and immoral life and  was addicted  to women.  So far as the debt due to the Bank  was concerned,  the  allegation was, though not  expressed  very clearly,  that  it was a borrowing for a  personal  business newly  started by the father and would not, therefore,  bind the  minor’s  share in the family  properties.   As  already stated,  the relief for partition in that suit was  confined to  the properties at Palghat in Madras.  While this  appli- cation  for  leave to sue in forma pauperis  was  pending  a notice  was  issued  on  May  27,  1948  through  a   lawyer purporting  to act on behalf of the appellant, addressed  to his father, in which the partition of the properties of  the family situated in the Cochin State was demanded This notice was  followed, by a deed of partition dated June 3, 1948  by which the properties of the family in the Cochin State  were purported  to  be divided into two equal parts,  the  father being  directed to pay the debts borrowed by him out of  the share  allotted to him, the deed reciting an agreement  with the father that the minor should be free from any obligation discharge  those debts.  The debt due to the Bank  which  is the subject of the present proceedings, was among those  the discharge  of  which the father under took under  this  deed marked  as Ex.  VI.  The deed recited that this debt  was  a personal debt of the father and was therefore not binding on the  son  and  this  was assigned  as  the  reason  for  the provision  made for its discharge by the father without  any obligation  being laid upon the son in that behalf.  One  of the questions arising in the appeal is as regards the effect of  this partition on the rights of the Bank to realise  the moneys  due to it from the share allotted to the son in  the Cochin properties which were mortgaged under Ex.  ’E.’ Reverting to the proceedings giving rise to this appeal,  to the  mortgage suit filed by the Bank several  defences  were raised  on behalf of the appellant.  It is not necessary  to set  out all of them but it would sufficient if those  which have a bearing on the points urged before us are  mentioned. Before dealing with 654 the controversial issues we may state that there were a  few to  which  it  is sufficient to make  a  passing  reference.

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There  was a formal denial of the truth and validity of  the promissory notes and the passing of consideration thereunder and  also  about  the sufficiency or  admissibility  of  the memorandum Ex.  ’E’ to create a mortgage by deposit of title deeds.   These do not appear to have been seriously  pressed and have been found in favour of the plaintiff-bank.   There was  also  an  issue that the  suit-debt  was  tainted  with illegality  and immorality, but on the facts it was such  an untenable plea that it was easily found against.               Issue no 2 ran:               "Whether the trade mentioned in the plaint was               a new trade started by the 1st defendant or an               ancestral   trade  and  are  not   the   debts               contracted by the father-the 1st defendant-for               purposes of the trade binding on defendant no.               2 even if the said trade be not ancestral?" This issue, at least the first part of it has been found  in favour  of the appellant that the trade viz., the supply  of black  pepper to the Government was a new trade  started  by the  1st defendant and was not an ancestral trade  and  that finding has not been disturbed by the High Court and being a concurrent  finding on a question of fact was not  naturally challenged  before us. Closely related to this is issue  no. 14 which ran:               "Are  the  debts sued on incurred  for  family               necessity and binding upon the 2nd defendant?" The  learned trial Judge recorded a finding that  the  debts sued  on were not incurred for family necessity nor for  the benefit  of the family.  These findings also which were  not varied  by  the High Court were not  questioned  before  us. Incidentally  it should be mentioned that the learned  trial Judge  found,  when  dealing with issue no. 9  which  was  a general issue relating 655 to the binding character of the debt on the appellant,  that the  mortgage was not for securing an antecedent  debt,  but this  finding  was reversed by the High Court,  the  learned Judges holding that to the extent of Rs. 59,000 the mortgage loan went in discharge of antecedent debts and we shall have occasion  to deal with this matter in detail later  in  this judgment.               The 13th issue ran:               "Is  the  partition set.up by  the  defendants               true  and  bona  fide  and  binding  upon  the               family?" This  was answered in the affirmative and in favour  of  the appellant  by the learned trial Judge but that  finding  has been  reversed  and the partition has been found not  to  be bona fide by the High Court and that is one of the points in controversy  in the appeal before us.  Issue no. 1 0 was  in these terms:               "Are  the  Defendants Cochin  domiciles?   Are               they  not  governed by the law of  the  Indian               Union being permanent residents of the  Indian               Union?" An  issue in this form arose because of the different  views entertained  of  the Hindu law as regards the scope  of  the pious  obligation  of a son to discharge the  debts  of  the father  which  are not illegal or immoral.  In the  view  of Hindu  lawyers the repayment of a debt was conceived of  not merely as a legal obligation which had been undertaken  when the  debt  was incurred but non-repayment was  considered  a sin.   The  duty of relieving the debtor from this  sin  was fastened  on his male descendents to the third degree.   The duty  being thus religious, it was held not attracted if  in

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its  nature it was illegal, or immoral  i.e.,  avyavaharika. Whatever  might have been the extent of the son’s  liability according to the Hindu law givers, under the Mitakshara  law as administered in all the States, the liability of the son, grandson,  great  grand  son  etc., was  not  treated  as  a personal liability but as dependent on his becoming entitled to 656 family  assets and that it extended to the entirety  of  his interest therein, but no more. The authorities to which it is wholly unnecessary to  refer, have  firmly established the following and the  position  is not in doubt: (1)  A father can by incurring a debt, even though the  same be not for any purpose necessary or beneficial to the family so  long as it is not for illegal or immoral  purposes,  lay the entire joint family property including the interests  of his  sons open to be taken in execution proceedings  upon  a decree for the payment of that debt. (2)  The  father  can,  so  long  as  the  family  continues undivided  alienate the entirety of the family property  for the  discharge of his antecedent personal debts  subject  to their not being illegal or immoral. In  other  words, the power of the father  to  alienate  for satisfying his debts, is co-extensive with the right of  the creditors  to  obtain satisfaction out  of  family  property including the share of the sons in such property. (3)  Where  a  father  purports to burden the  estate  by  a mortgage  for purposes not necessary and beneficial  to  the family,  the mortgage qua mortgage would not be  binding  on the  sons  unless  the  same was for  the  discharge  of  an antecedent debt.  Where there is no antecedency, a  mortgage by the father would stand in the same position as an out and out sale by the father of family property for a purpose  not binding on the family under which he receives the sale price which is utilised for his personal needs. It  need hardly be added that after the joint status of  the family is disrupted by a partition, the father has. no right to deal with the family property by sale or mortgage even to discharge an antecedent debt, nor is the son under any legal or moral obligation to discharge the post-partition debts of the father. (4)  Antecedent debt in this context means a debt antecedent in fact as well as in time, i.e., the 657 debt must be truly independent and not part of the  mortgage which is impeached.  In other words, the prior debt must  be independent  of the debt for which the mortgage  is  created and the two transactions must be dissociated in fact so that they cannot be regarded as part of the same transaction. The latest of the rulings of the Privy Council in which  the law  as  stated  above was expounded is  reported,  as  Brij Narain v. Mangla Prasad(1) and this Court in Panna Lal ’I v. Mst.   Naraini(2)  has expressly approved  and  adopted  the same. in  Cochin and Travancore, however, the law  was  understood somewhat  differently.  Both the High Courts of  Cochin  and Travancore when these States were under princely rule, held, following  what  they considered as the  logical  result  of certain  earlier  decisions  of the Privy  Council,  that  a mortgage executed by a father, notwithstanding that the debt secured  thereby  be not incurred for  family  necessity  or benefit  but were purely personal, would be binding  against the  joint family property in the hands of the son  even  if the  debt be not antecedent to the creation of the  mortgage

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on  the  doctrine  of  the  latter’s  pious  obligation   to discharge  them.   This was on the principle  enunciated  by Bashyam Ayyangar in Chidambara Mudaliar v. Kootha Perumal(3) (a decision, however, subsequently overruled by a Full Bench of   the   Madras   High   Court   in   Venkataramayya    V. Venkataramana(4) on the ground that it was inconsistent with several  earlier rulings of the Privy Council) that  it  was difficult to make any distinction between a mortgage created for  the  discharge  of an antecedent debt  and  a  mortgage created  for  a debt then incurred, for in either  case  the debt not being avyavaharika is binding upon the son and  the enforcement  of  the security exonerates the  son  from  the burden of the father’s debt. (1)  51 I.A. 129. (3)  I.L.R. 27 Mad. 326. (2)  [1952] S.C.R. 544 (4) I.L.R. 29 Mad 200. 1/SCI/64-42 658 It would, therefore, be seen that if it were found that  the debt to the Bank was not incurred for purposes necessary  or beneficial to the family, the question whether the Hindu law rule  applicable  was the one as understood and  applied  in Cochin  or  that expounded in Brij  Narain(1)  would  assume great   importance,  and  for  the’  ascertainment  of   the particular  law which applied; the place of domicile of  the family would have relevance. The  learned Subordinate Judge found that the family of  the father-  1st  defendant-was a resident of and  domiciled  in Palghat and that therefore would not be governed by the rule of Hindu law as understood and applied by the High Courts of Travancore and Cochin.  The learned Judges of the High Court while  affirming the finding that the defendants were  domi- ciled  in  and  residents  of  Palghat  and  were  not  even residents  of Cochin, were still of the opinion that as  the properties  which were the subject of the mortgage  were  in Cochin, the Cochin view’ of the Hindu law was applicable  to determine  the  rights of the parties on the basis  of  that interpretation of the law- being the lex situs and  applying that  law  came  to  the  conclusion  that  eve  a  if   the mortgage--Ex.  ’E’ was concurrent with and part of the  same transaction as the debts which it secured, the mortgage  was binding on the appellant’s share in the family property.  It was on this line of reasoning that the learned Judges  held- that  even though of the mortgage debt under Ex.   ’E,  only Rs.  59,000  was found by them as having been  utilised  for discharging  the antecedent debts of the father,  still  the Bank was entitled to a mortgage decree against the share  of the  appellant to the extent of the entire  mortgage  money. This  was one of the points which was canvassed  before  us, which. we shall deal with in its proper place. Pausing here and before setting out the points urged  before us  by  the appellant, there is one matter that  has  to  be mentioned  merely  for  the purpose  of  clarification.   As already stated, the suit as originally (1)  51 1. A. 129. 659 filed  was  for the recovery of the debt due under  all  the three  promissory  notes-Exs.   A, B & C  and  the  interest accrued thereon which totalled over Rs. 1,27,000 though  the property  against which the mortgage decree was  sought  was confined  to  the Cochin property which was covered  by  the memorandum   of  deposit-Ex.   E.  The  learned   Sub-Judge, however, held that the suit in so for as the debt under  the pronote  Ex.  C. for which properties in Palghat were  given

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as  security  could  not  be  sued  for  in  his  Court  and disallowed the Bank’s claim to that extent.  That portion of the  decree has become final and was not challenged  by  the Bank  on  appeal.  It might be mentioned that  the  Bank  is stated to have subsequently filed a suit for that sum in the court in Palghat and has obtained a decree thereon.  We  are setting  out these matters for pointing out that the  appeal is  practically  confined to the binding  character  of  the mortgage--ExE  in so for as it secured the repayment of  the debts evidenced by. Exs.  A & B. Learned  counsel  for  the  appellant  urged  the  following contentions in support of the appeal: (1) The finding by the High Court that the partition of  the family  properties  effected between the appellant  and  his father  was  not  bona,’  fide was  not  justified  on  the, admitted facts and was based on erroneous reasoning. (2)  The learned Judges erred in holding that the Hindu  Law as  understood  and applied by the Courts  in  the  previous Cochin State could determine the liability of the  appellant who was a resident of Palghat. (3)  The  learned  Judges erred in their  finding  that  the mortgage  evidenced  Sy Ex.  ’E’ was to any extent  for  the discharge of antecedent debts. The first question that falls for decision and of which  the learned  Judges of the High Court difference from the  trial Judge  was in relation to the nature of the partition  which was  evidenced by the registered instrument marked Ex.   VI- whether  it  was  such  as could be  termed  bona  fide  and satisfied the 660 requirements  of  a  partition  which  would  preclude   the creditor of the father from having recourse to the share  of the family property in the hands of the son. Before  we  deal with the facts relevant to that  matter  we consider  it would be convenient to focus attention  on  the real  points for determination in that context and for  that purpose we shall extract a passage from the judgment of this Court  in  Pannalal v. Mst. Naraini(1) where this  is  dealt with.  Mukherjea, J. explained the law on the point in these terms:               "The  sons are liable to pay these debts  even               after   partition   unless   there   was    an               arrangement for payment of these debts at  the               time      when     the     partition      took               place.................. The question now comes               as  to  what is meant by  an  arrangement  for               payment of debts.  The expressions ’bona fide’               and  ’mala fide’ partition seem to  have  been               frequently used in this connection in  various               decided  cases.  The use of  such  expressions               far from being useful does not unoften lead to                             error and confusion.  If by mala fide partition               is meant a partition the object of which is to               delay  and  defeat the  crediditors  who  have               claims   upon  the  joint   family   property,               obviously   this   would   be   a   fraudulent               transaction not binding in law and it would be               open  to the creditors to avoid it  by  appro-               priate  means.   So  also  a  mere  colourable               partition  not  meant to operate  between  the               parties  can be ignored and the  creditor  can               enforce  his remedies as if the parties  still               continued  to be joint.  But a partition  need               not  be  mala  fide  in  the  sense  that  the

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             dominant  intention  of  the  parties  was  to               defeat  the  claims of the  creditors;  if  it               makes  no  arrangement or  provision  for  the               payment  of the just debts payable out of  the               joint  family property, the liability  of  the               sons for payment of the pre-partition debts of               the         father         will          still               remain .................... An arrangement for               payment of debts does not necessarily imply               (1).  [1952] S.C.R. 544.               661               that  a separate fund should be set apart  for               payment  of these debts before the net  assets               are divided,, or that some additional property               must be given to the father over and above his               legitimate   share  sufficient  to  meet   the               demands of his creditors.  Whether there is  a                             proper arrangement for payment of the debts  or               not, would have to be decided on the facts and               circumstances of each individual case.  We can               conceive of cases where the property  allotted               to the father in his own legitimate share  was               considered,  more  than  enough  for  his  own               necessities  and he- undertook to pay off  all               his  personal debts and release the sons  from               their  obligation  in respect there  That  may               also be considered to be a proper  arrangement               for   payment   of   the   creditor   in   the               circumstance of a particular case.  After  all               the  prima liability to pay his debts is  upon               the father himself and the sons should not  be               made  liable if the property in the  hands  of               the  father  is  more  the  adequate  for  the               purpose.  If the arrangement made at the  time               of  partition  is  reasonable  a  proper,   an               unsecured  creditor cannot have an  reason  to               complain.   The  fact that he is no  party  to               such arrangement is, in our opinion immaterial               of course, if the transaction is fraudulent or               is  not  meant to be operative,  it  could  be               ignored or set aside; but otherwise it is  the               duty of unsecured creditor to be on his  guard               lest  any family property over which he ha  no               charge  or  hen is diminished for  purpose  of               realization  of his dues............ Thus,  in               our  opinion,  a  son is  liable,  even  after               partition  for the pre-partition debts of  his               father  which are not immoral or  illegal  and               for  the payment of which no  arrangement  was               made at the date of the partition." There  are one or two observations which it is necessary  to make before applying the law as here laid down to the  facts of the present case.  In the 662 first place we are here concerned primarily with the  rights of  the  Bank as a secured creditor to proceed  against  the security,  ignoring the partition.  To such a situation  the law  as  explained in the judgment in  Pannalal’s  case  (1) would  not  have immediate relevance, for Mukherjea  J.  was dealing  with  the rights of an unsecured  creditor  of  the father  to  proceed against the shares of the sons  after  a partition.  In other words, the nature and bona fides of the partition  and the right of the creditor to proceed  against the share allotted to the son in such partition would  arise

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for consideration only if the Bank were unable to  establish that the mortgage was as such not binding on the son.   This was  the situation of the Bank when the learned trial  Judge found  that the mortgage was not binding on the  appellant’s share  in  the family property.  If, however,  the  mortgage were  binding  on the son either because it was  created  to raise money for purposes binding on the family as  necessary or  beneficial  there  for  or  was  executed  in  order  to discharge  an antecedent debt of the father, the bona  fides of  the partition and the allotment of property to the  sons cannot affect the rights of the secured creditor to  proceed against  the  properties allotted to the son which  are  the subject of mortgage.  In the present appeal, in view of  the conclusion  we  have  reached, for reasons  which  we  shall discuss  later in the judgment, that the mortgage under  Ex. ’E’  was for securing the repayment of an  antecedent  debt, the  bona  fides of the partition would not have  a  crucial significance.  Since however the question of the reality  or the binding nature of the partition would arise in the event of the mortgaged, property being found in sufficient to dis- charge  the  decree and the creditor or  the  decree  holder thereafter  seeks to proceed against properties allotted  to the  share of the appellant which were not included  in  the mortgage, we have thought it necessary and proper to examine it. Proceeding  then  to  deal with the matter,  we  must  first observe that the onus of proving that (1)  [1952] S.C.R. 544. 663 the partition arrangement is fair and bonafide in the  sense explained by this Court in Panna Lal’s case(,,) was upon the appellant, and that the approach of the learned trial  Judge to the question is vitiated by casting the burden of proving that  the  arrangement was mala fide on the  creditor  Bank. And for this reason.     At  the  moment the  liability  was incurred by the     father  the  creditor  had  a  right  to proceed against     the entirety of the joint family  estate including  the  share of the son since, the debt  not  being avyavaharika,  the  son  was under  a  pious  obligation  to discharge  it out of family property.  Subsequent thereto  a partition  takes place by which the share of the son in  the property  is  separated  and vested in him,  free  from  the rights and powers of the father.  It is the plea of the  son that  by reason of an arrangement which he has entered  into or  which  has  been  entered into on  his  behalf,  he  has discharged  himself  from  liability  to  the  creditor   an arrangement  to which the creditor is not a party but  which under  the  law  is binding on  the  creditor  provided  the arrangement fulfils certain conditions.  From this it  would seem to follow logically that the onus would be upon the son to  establish that the nature of the arrangement  under  the partition  was such, as made proper and  adequate  provision for  the discharge of the debt, for that is the  basis  upon which his own discharge from liability depends.  The learned trial  Judge framed an issue regarding the  partition  being fair  and bona fides and binding on the Bank but the  entire discussion  on  the facts relating to it  proceeded  on  the footing  that the onus was upon the Bank to  establish  that the partition was mala fide. The,next  error of the learned trial Judge lay  in  ignoring the  circumstance that the partition did not make  provision for  the  discharge  of the entirety of  the  debts  of  the father, nor did it take into account, all the properties  of the  family.   The partition was evidenced by  a  registered instrument dated June 3, 1948 The first feature of this deed

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is that though the, (1) [1952] S.C.R. 544. 664 family  had properties both at Palghat in the then State  of Madras,  as well as in the Cochin State, the partition  deed which  has  been  marked  as Ex.  VI  dealt  only  with  the properties  in Cochin.  These properties were  divided  into two  parts which were stated to be equal in value  and  they were allotted respectively to the father and the minor  son. It contained a recital that the father acknowledged that the debts incurred by him were for his own personal purposes and were  not  binding on the son and that as a  consequence  of this state of affairs the debt due to the Bank was  directed to  be  discharged  by the father-a direction  to  which  he expressed his agreement.  The learned trial Judge found that the total property at Cochin was fetching an income of about 18  to  19 thousand rupees a year and computing  the  market value of the property on that basis considered that it. made ample  provision  for the discharge of the debt due  to  the Bank.  But he paid no attention to the fact that besides the debts  for the discharge of which provision was made in  Ex. VI,  the father had incurred several debts to  creditors  in Palghat  and which the son was under a pious  obligation  to reply  but  to this we shall revert after  setting  out  the grounds on which the learned Judges of the High Court  based -their finding. As  stated  earlier, the learned Judges of  the  High  Court reversed  the  finding of the learned trial  Judge  on  this point.  Briefly stated their reasons were two fold: (f) That the  partition was brought about in order to  forestall  the action of the creditors of the father, who sought to proceed against  the family properties and so the  transaction  bore the  stamp of mala fides.  We have already referred  to  the suit in forma paupereis filed at the Sub-Court, Palghat  for the  partition of the Palghat properties.  In  that  plaint, and  this also has already been adverted to a arg number  of debts  were  set  out  and in regard to  some  of  them  the plaintiff claimed the relief of having them set aside on the ground  that  they  were incurred  for  illegal  or  immoral purposes and so were not binding on him.  The allegations in that plaint, therefore, 665 made it clear that there were a number of creditors who  had filed suits against the father and that was heavily  pressed for  discharging  them.  It was in that situation  that  the suit  in  Palghat was filed And it was when things  were  in this  state that the partition of the Cochin properties  was brought about This necessarily showed that the partition was not  bona fide. (2) In the deed of partition-Ex. there is  a recital that the debt due to the Bank was not binding on the appellant.  There was thus a repudiation of liability on the part  of  the son and the learned Judges held  that  such  a repudiation  would  by itself negative the  partition  being bona fide and binding on the creditor.  Learned counsel  for the appellant submitted that of the two reasons assigned  by the  learned Judges for their conclusion that the  partition was  not bonafide the first was insufficient and the  second irrelevant and immaterial.  As regards the first ground,  he urged  that at the most, it would occasion greater  scrutiny and provided that, as found by the learned trial Judge,  the properties  allotted to the share of the father were  fairly sufficient  for  the discharge of the debts binding  on  the son, the circumstances relied on would not per se render the arrangement mala fide.  Regarding the 2nd ground, he pointed out  that the fact that the father took over  the  liability

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for the reason that the debt was not binding on the son, was a  matter  of legitimate arrangement inter  se  between  the coparceners  and  would have no bearing on the  fairness  or bona  fides of the partition with was concerned really  with ascertaining  whether the property set apart for the  father was  or  was  not  sufficient  for  the  discharge  of   the indebtedness which he undertook.  We see considerable  force in the submission of the learned counsel., particularly  was the criticism of the second of the above reasons The recital as  to  the character of the debt as against the  son  is  a recital  in a document to which the father and the son-  are parties  and if between them the son repudiates the debt  as binding on him, that is no reason by itself for holding  the partition to be mala fide. 666 We  agree that the real question for consideration  in  such cases is whether sufficient property has been set apart  for the share of the father to enable him to discharge the debts which  he has undertaken to discharge.  Examined  from  this point  of  view  we are ,,clearly of the  opinion  that  the partition  deed-Ex.  VI does not satisfy this test.  In  the first  place,  we  agree with the learned  Counsel  for  the respondent in his criticism that the learned trial Judge had really  no basis in the evidence for recording  his  finding ;is regards the income from the property.  That finding  was based not on any evidence adduced directed to that point but by  taking into account certain statements made to the  Bank by  Kalyanasundaram at the time the loan was raised.   As  a matter  of fact the 1st defendant in his  cross  examination stated:               "The properties partitioned and allotted to me               (under Ex. 6) will fetch a pattom of 2,000 and               odd (paras of paddy).  I have got debt to  the               extent  of Rs. 80,000.  It is the  debt  under               Exs.   A & B. I have to pay other  amounts  to               the  bank.  I have to pay a debt of about  Rs.               2,00,000  to the bank.  In addition to that  I               have  also  got other debts to the  extent  of               more  than  rupees  one  lakh.   The   decrees               obtained against me will come to more than Rs.               50,000-60,000.   They  are  decrees   obtained               against me." This would disclose two infirmities in the appellant’s case: (1)  No provision was admittedly made under Ex. VI  for  the payment  of  all  the debts of the  father  and  there  were considerably more debts payable by him than those for  which provision  was  made  for the discharge  out  of  properties allotted  to  him.  (2) There  was  no  acceptable  evidence regarding  the  value  of  the  properties  in  Palghat  and therefore one cannot proceed on the basis that the share  of the father in the Palghat properties would be sufficient  to discharge the debts not provided for under Ex.  VI.  Learned counsel  for  the  appellant  faintly  suggested  that   for considering  the bona fides of the partition under  Ex.   VI only the debts incurred in Cochin and 667 on which suits could be laid in Cochin should be  considered but  this is obviously incorrect because even assuming  that in  regard to each one of those debts, a suit could  not  be instituted  in the Courts in the Cochin  State,  undoubtedly the   decrees  obtained  in  the  Madras  State   could   be transferred  for  execution to Cochin and  vice  versa.   In these  circumstances,  unless  the  entirety  of  the  debts payable by the father were taken into account and sufficient and adequate provision made for the discharge of these debts

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from and out of the share allotted to the father-either  his original  share or any added assets to enable him to  do  so -the  partition  cannot be held to be bona fide  within  the meaning of the decisions.  We therefore agree with the  High Court, though not for the same reasons, in its finding  that the  partition  under Ex.  VT is not such as to  be  binding against the Bank. We  shall next deal with the second point which  relates  to the reasoning on the strength of which the learned Judges of the  High Court granted a decree to the bank for the  entire sum  of  Rs. 80,000 and odd covered by  the  two  promissory notes ’A’ & ’B’ notwithstanding their finding that only  Rs. 50,000  and odd out of the loan of Rs. 80,000  went  towards the  discharge of antecedent debts.  We should add  that  we are reserving for later consideration the correctness of the grounds  for  holding that to the extent of Rs.  59,000  the mortgage was for discharge of antecedent debts which is  the subject  matter  of the third of the points  raised  by  the Appellant. Their reasoning may be set out in their own words:               "When  the  plaint  transactions  took   place               British   India   and   Cochin   State    were               independent sovereign states and according  to               Private International law it is the law of the               situs  of  the  property  that  should  govern               contracts relating to it." On this principle they applied the Hindu Law as administered in Cochin State to determine the rights of the creditor  and under,  that law even a mortgage, which was  contemporaneous with the debt would 668 be binding on the sons, provided the same was not illegal or immoral,  though the debt was not for a purpose  binding  on the  family either by way of necessity or benefit.  On  this basis  they  held that the bank was entitled to  a  mortgage decree for the entire sum even though Rs. 20,000 and odd  of it  was held not to be for the discharge of  any  antecedent debt.   Learned  counsel for the  appellant  challenged  the correctness  of  this reasoning and the application  of  the rule of the lex situs to a case like the present.  We  agree that  the  learned Judges were not right in  the  view  they expressed  about the applicability of this rule  of  Private International Law.  The rule that they applied to  determine the  rights  to  immovable property in Cochin  was  not  any statutory law which was binding on parties who had  dealings in  regard  to  land  in that State  in  which  event  their reasoning  was  unexceptional.   Taking  the  Cochin   State itself,  the power of a person to dispose of property or  to encumber it would have depended upon whether he was a  Hindu or a Muslim or a Christian and in each case the right of the owner  to  dispose  of the property would  depend  upon  his Personal  Law as modified by any statute applicable to  that community to which he belonged.  There was in the matter  of dispositions of the type we have to deal with in this  case, no  lex  situs  which could be  applied  irrespective  of  a personal law governing the owner.  By way of example, let us take  the case of a testamentary power of  disposition  over immovable  property  in  that State.  If the  owner  were  a Christian he might be entitled to dispose of property to the full  extent.  If he were a Muslim, there would be  a  limi- tation  on such a power based upon the rules of  Muslim  Law applicable  to  him  subject, of course,  to  any  statutory modifications thereof.  In the case of a Hindu, his power to dispose  of by will would depend upon whether  the  property was self-acquired or joint and whether he was a member of  a

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Joint Hindu Fami the existence of coparceners and the  like. The Cochin law itself, therefore, recognised that Hindu  Law was  a  Personal  Law and that the rights  of  dealing  with property flowed from the Personal 669 Law of the owner.  It is hardly necessary to cite  authority for  the  position that Hindu Law is a  Personal  Law.   The matter  might  be further illustrated  by  another  example. Even  among  the Hindus, there are persons governed  by  the Dayabhaga  system  of  Hindu Law.  If such  a  one  acquired property  in Cochin it could not be that the  Dayabhaga  not being  prevalent  in  Cochin  some  system  of  law-not  the Dayabhaga  but either the Mitakshara or some  other  system- would apply in the absence of course of some valid statutory provision to determine either the rights to property or  its devolution.  The reasoning of the learned Judges, therefore, proceeds  upon a basic wrong assumption that the  Mitakshara law as understood and administered in Cochin State was  some sort of lex situs which would apply to determine the  rights of  parties whatever might be their Person Law i.e.,  Hindus following  either the Mitakshara as understood elsewhere  or governed  by  some system other than the Mitakshara  or  not being  Hindus  governed  by some other system  of  law.   As stated  in  Mayne’  Hindu  , Law(1)  though  in  a  slightly different context               "Prima   facie   any  Hindu  residing   in   a               particular  province  of India is held  to  be               subject  to the particular doctrines of  Hindu               Law  recognised in  that  province............               This law is not merely a local law, it becomes               a  personal  law and a part of the  status  of               every    family   which   is    governed    by               it.................  In this respect the  rule               seems an exception to the usual principle, the               lex loci governs matters relating to land  and               that  the law of the domicil governs  personal               relations.  The same rule as above would apply               to  any  family  which, by  local  usage,  had               acquired any special custom of succession,  or               the like, peculiar to itself, though differing               from that either of its original, or  acquired               domicile The reason is that in India there  is               no  lex loci, every person being  governed  by               the law of his personal status."                (1)  Mayne’s Hindu Law, 11th Edn. para 56.               670 In  the  present case on the concurrent finding of  the  two courts  that  the family of the  defendants  were  permanent residents  of and domiciled in Palghat it would follow  that the  binding character of the father’s alienation by way  of mortgage quoad the son had to ’be judged in the light of the principles  laid  down from very early times  by  the  Privy Council  and  accepted by the Full Bench  decisions  of  the Madras  High Court and finally authoritatively expounded  in Brij  Narain  v.  Mangla Prasad(1) which  has  received  the approval  of this Court.  When the Bank dealt with  the  1st defendant,  it must be taken to have contracted with him  on the basis of such a law being applicable to the transaction, so  that there is no question of hardship arising  from  the application of the British Indian Law to determine the scope of the father’s powers. This  leads  us  to the third and last point  urged  in  the appeal as regards whether and to what extent the debt  under the mortgage evidence by Ex.  ’E’ went towards the discharge of  the  antecedent debts of the father for it is  only  for

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such  amount  that  the Bank can  claim  a  mortgage  decree against the share of the appellant in the family properties. Before  examining  the  facts in  relation  thereto,  it  is necessary  to  narrate  briefly  the  manner  in  which  the attention of the Courts were directed to this point.  In its plaint  the  Bank averred that the debt was incurred  for  a family  purpose, it being stated to be in connection with  a family  business.   This  was denied and it  is  now  common ground that the debt was incurred merely for the starting of a  new business by the father and was not for any  ancestral family business.  So far as the plaint went, the Bank had no case  that the debt secured by the mortgage was one  binding on  the  family as being for a necessary purpose.   Also  in terms there was no plea that the mortgage was binding on the son’s share by reason of the debt being for the discharge of the  antecedent indebtedness of the father.  The defence  on behalf of the appellant was threefold:  Besides  the   usual formal denial of the (1) 51 I.A. 129. mortgage   not   being  supported  by   consideration,   the contentions raised were: (1) That the mortgage debt was  not binding  on the appellant’s share of the  family  properties for  the reason that the debt was not incurred for  purposes which in law were either necessary or binding on the family, and  (2)  that  the debts were tainted  with  illegality  or immorality.  The findings which were recorded on these three defenses  were concurrent and are no longer in  controversy. It  was  found  that the mortgage  was  fully  supported  by consideration,  that  the  debt was  not  incurred  for  any necessary  or  beneficial purpose of the family  and  lastly that the purpose for which the debt was incurred was neither illegal   nor  immoral.   In  this  context  it  should   be remembered  that the suit was filed by the bank on June  17, 1948 before Cochin became part of the Indian Union.  At that date  there could be no doubt that if the Courts  at  Cochin applied  the Hindu Law as understood by’ the High  Court  of that  State disregarding the circumstance arising  from  the domicile  of the mortgagors, the question whether  the  debt secured  by the mortgage was or was not for  discharging  an earlier antecedent indebtedness of the father was immaterial and nothing more was needed for the plaintiff to succeed  in obtaining  a  mortgage decree as against the  entire  family property including the son’s share therein than a finding by the  Court  that the debt was not illegal  or  immoral.   In fact, even the allegation in the Bank’s plaint that the debt was  for  the  purpose  of  financing  a  family  trade  was superfluous,  and  the negativing of its  averment  in  that regard would not have affected its rights in any manner.  In the circumstances, the Bank could not be seriously blamed if it  considered  that the question whether there was  not  an antecedent  debt which the mortgage under Ex.  E  discharged was not relevant at all and made no averment asserting  such a  fact.   Accordingly no attention was apparently  paid  by either party to this question.  By the date, however, of the arguments before the learned trial Judge the princely  State of  Cochin had acceded to the Indian Union and had become  a Part ’B’ State under the 672 Constitution.  Founding himself on this circumstance as also the fact that the defendants were permanent residents of and domiciled  at  Palghat  learned,counsel  for  the  appellant submitted  to  the  trial  Judge  that  the  Hindu  Law   as understood and expounded in Brij Narain v. Mangla Prasad (1) would  apply to determine the rights of the parties  to  the transaction  and  if that law were applied, on  the  finding

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that  there  had been a partition in the  family  which  was stated  to be fair under which a proper provision  had  been made  for the discharge of the debts of the father,  coupled with  the  finding  that debts under Exs.  A &  B  were  not incurred  for a family trade or for a purpose  binding  upon the  family,  the  mortgagee was not entitled  to  a  decree against  the security under Ex.  ’E’ which could not  extend to the share allotted to the appellant under the  partition- Ex.   VI.   The  learned  trial  Judge  made  an  incidental finding,  or more correctly an observation which it must  be taken  to be on the state of the pleadings, that  the  debts evidenced  by  Exs.   A  & B did not  go  to  discharge  any antecedent liability of the father.  When the matter went up in   appeal  before  the  High  Court  the  learned   Judges considered that even if Brij Narain v. Mangla Prasad(1)  was applied  and  even  if the finding that there  had  been  no ancestral trade and that the debt had not been incurred  for a family purpose were accepted, there would still be need to ascertain  whether  there  was any antecedent  debt  of  the father  which  had been discharged by the execution  of  the promissory notes Exs.  A and B and the mortgage deed Ex.  E. For  this  purpose  they  called  for  a  finding  from  the Subordinate Judge under O. XLI. r. 25, Civil Procedure Co-de and  having  regard to the state of the  pleadings  and  the evidence  they  raised a specific issue on  that  point  and directed  the  Subordinate  Judge to afford  the  parties  a further  opportunity  of  adducing  such  evidence  as  they desired  on the matter.  The Subordinate  Judge  accordingly heard further evidence and recorded a specific, finding that the  debts under Exs.  A and B were not for the  purpose  of discharging any antecedent debts which (1)  51 I.A. 129. 673 could really be termed to be independent transactions.   The appeal  was thereafter heard and the learned  Judges,  after considering  this  finding, dissented from  the  view  there expressed and held that out of the Rs. 80,000 which were the principal  amounts covered by the two promissory  notes-Exs. A  & B, there was, an antecedent debt to the extent  of  Rs. 59,000 and odd.  Though on this finding, if the decision  in Brij Narain v. Mangla Prasad(1) were applied, the bank would have  been entitled to a mortgage decree only in respect  of the  principal sum of Rs. 59,000 and odd and to  a  personal decree  for the balance to be recovered out of the share  of the appellant in the family property on the finding that the partition Ex. VI was not bonafide and therefore not impeding the rights of the creditor, they, nevertheless proceeded  to grant a decree to the Bank for the entire sum due on the two promissory  notes-Exs.   A and B for the  reason  that  they considered  that the law applicable to determine the  rights of  the  Bank was not the Mitakshara law as  understood  and explained  in  Brij  Narain’s Case(1) but  the  law  as  was understood and applied in the decisions of the High Court of Cochin  prior  to the Constitution.  We have  already  dealt with  the correctness of the view of the High Court on  this point. What  we  are  here concerned with is  the  finding  by  the learned Judges of the High Court that out of the sum of  Rs. 80,000 covered by Exs.  A and B a sum of Rs. 59,000 and  odd really  went in discharge of an antecedent debt and that  to that extent, even applying the law as understood in what was formerly  British India, the Bank would have the right to  a mortgage  decree  as  against the  appellant.   The  learned counsel  for  the appellant has strenuously  contended  that this finding of the High Court is wrong and that the  entire

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transaction  by  which  the  father  obtained  finances  for implementing  the  pepper contract with  the  Government  of India was one single and entire transaction and that it  was not capable of being split up, as the learned Judges of  the High Court had done (1) 511.  A. 129. 674 in  order to record a finding of antecedency for a  part  of the  suit-mortgage  debt.  On the other  hand,  the  learned counsel for the respondent has submitted to us that not only were  the learned Judges of the High Court right in  holding that Rs. 59,000 and odd was an antecedent debt but that  the learned  Judges should have gone further and held  that  the entire  sum of Rs. 80,000 covered by Exs.  A and B  was  for the discharge of antecedent debts. This  question of fact was the principal matter  of  contest before  us.   We  shall start  by  briefly  summarising  the transactions between the 1st defendantfather’ and the  Bank. The  first  defendant  entered  into  a  contract  with  the Government of India for the supply to them of 2000 Cwts.  of pepper  in  or  about May 7, 1945.  The total  cost  of  the supply was Rs. 1,37,000.  He entered into similar  contracts later in October and November 1945 and under these the value of  the goods to be supplied was respectively  Rs.  1,23,000 and  Rs. 3,63,000.  Even for implemening the first  contract of  May  1945, the first defendant apparently  had  need  to borrow.  An application for a loan was made on or about  the 4th or 5th of June 1945 and then the 1st defendant sent  the documents of title that he held in respect of his properties in Cochin and ’desired accommodation by way of an over-draft for  Rs.  50,000  from  the Bank.  The  letter  by  the  1st defendant  to the Bank is not on the record but it  is  seen that  these documents were sent to the legal Advisor of  the Bank  on  June  6,  1945 and  the  latter  was  directed  to scrutinise  them and inform the Bank whether  the  documents were  complete.  They were returned on the same day  with  a note stating that the Bank should satisfy itself whether the particulars set out in the letter were true and if this were so  the  amount could be paid on a mortgage  by  deposit  of title deed.  This letter of the Legal Adviser as well as the request of the 1st defendant was circulated to the directors of the plaintiff-bank and the loan asked for was  sanctioned by  the President of the Bank on June 11, 1945 and the  same was passed.by the 675 directors  on  the same day with a limit up to  Rs.  50,000. But  this was to be on a mortgage of the Cochin  properties. However  even  before  the request  for  the  overdraft  was circulated to the directors and their sanction obtained, the officers of the Bank, apparently acting on the  instructions of the Secretary gave him loans to the extent of Rs. 45,000. A loan of Rs. 30,000 on a promissory note carrying  interest at 6 1/4 % was granted on June 6, 1945 and two days later on a  further promissory note Rs. 15,000 was lent.  The sum  of Rs. 45,000 and interest thereon was carried to the debit  of what  is termed as a No. 1 account at the Palghat branch  of the Bank which was an overdraft account with a limit of  Rs. 50,000.   It  should  be noticed that the  creation  of  the mortgage  was long after this.  Apparently,  this  overdraft account  was opened under the directions of the Bank’s  head office at Trichur by a letter dated June 18, 1945  (referred to in the opening entry) carrying out the directions of  the President of the Bank dated June 11, 1945 to which reference has already been made.  The amount due on the two promissory notes  with  interest due up to June 19, 1945  came  to  Rs.

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45,054/11   and  this was the debit with which  the  account opened.  Subsequently there were operations in this  account either  i.e.,  both  by way of payment in,  as  well  as  of withdrawal  from this account and on November 14,  1945  the date  of  the promissory notes Exs.  A & B  the  amount  due under  this  account  was  Rs.  50726/15/4.   We  shall   be referring  to how this account was squared on  November  20, 1945  after referring to the history of the No. 2  overdraft account of the 1st defendant with the Bank. The  1st defendant made a second application for a  loan  on October  8, 1945 to the Bank for overdraft accommodation  up to  a limit of Rs. 3,00,000.  The security that  he  offered for  the  fresh advance that he required was  the  contracts entered into by the Government of India which he said  would be pledged with the Bank and he suggested that the  advances might be made to him on the security of the Inspection Notes of the goods that he would be supplying 676 to  Government.  He also promised that the receipt  for  Rs. 50,000 which had either been or would be deposited with  the Government  of India as security for the due fulfillment  of the contract, would be pledged with them, so that they would be  in  a position to obtain  payment of that sum  from  the Government themselves.  The Bank, however, demanded that  in addition  to  pledging the amounts which would  be  received from  the Government under the contract, the  1st  defendant should also create a mortgage by deposit of title deeds  ’of properties  in  Palomar for the loan that he  desired.   The proposal by the 1st defendant was considered at a meeting of the  Board  of Directors of the plaintiff-bank  and  it  was resolved  to give him additional overdraft facility  to  the extent of Rs. 60,000 which was split into two parts (1)  Rs. 30,000 on the security of properties at Palghat in regard to which  a  mortgage  was to be created by  deposit  of  title deeds, and (2) a further sum of Rs. 30,000 to be advanced by an  increase  in the overdraft limit of Rs.  50,000  on  the Cochlea properties.  This resolution was passed on  November 4,  1945.   But even before this resolution was  passed  and obviously  in anticipation of the decision of the  Directors the  overdraft account No. 2 of the, 1st defendant with  the Bank at Palghat was opened on October 24, 1945 with a  limit of  Rs.  30,000.   It would be seen that Exs.  A  &  B  were executed on November 19, 1945 and the deposit of title deeds and  the memorandum in connection therewith was also on  the same  date.  Between the 24th October 1945 and the  11th  of November  the  1st  defendant had operated  on  this  No.  2 account  both by payment in, as well as by withdrawing  from it and as a result of these transactions the amount owed  by him  to the bank on the 19th November 1945 was a sum of  Rs. 59,952/12/5.   The  position on November 19, 1945  when  the loan  under Exs.  A & B was raised and the mortgage  Ex.   E was  executed was therefore this.  Under the No.  1  account the 1st defendant owed the Bank Rs. 50,726/15/4.  On the No. 2  account  the amount due to the Bank was  Rs.  59952/12/5. It, was with this state of the account 677 that  Exs.   A & B were executed and the loan  of  Rs.80,000 secured  by the suit mortgage was raised.  This sum  of  Rs. 80,000  was made available to the 1st defendant, not by  the Bank  itself  adjusting the newly granted loan  against  the amounts  due up to that date and keeping the Rs. 29,000  odd that  would  still have remained due to it as  an  unsecured debt  due from him.  On the other hand, the head  office  of the Bank at Trichur handed over to the 1st defendant a draft for  Rs. 80,000 made out in favour of the 1st  defendant  on

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its  branch at Palghat.  That the draft was handed  over  to the 1st defendant is admitted.  It was handed over at a time when so far as the previous indebtedness was concerned,  the bank held no security though there might have been a promise to create one.  This draft was taken by the 1st defendant to Palghat  and  was paid by him into his No. 2  account  which therefore became reduced from a debit of Rs. 59,952 and  odd to a credit of over Rs. 20,000.  It was on this feature  and this operation on the account that the learned Judges of the High  Court  relied  on for their conclusion  that  the  Rs. 59,000  odd was an antecedent debt which was  discharged  by the draft of Rs. 80,000 handed over by the Bank when Exs.  A & B were executed.  It now remains to narrate how the No.  1 account  under which the 1st defendant was a debtor  to  the extent  of  Rs. 50,726 and odd became discharged.   The  1st defendant drew a cheque in his own name on November  20,1945 from his No. 2 account in which he had an overdraft limit to the  extent of Rs. 50,000 and paid this cheque into his  No. 1. account.  There was a small balance of Rs. 726/15,/4  due which  was  paid  in cash and that  account  was  closed  on November  20,  1945.  On these. facts the question  now  for consideration  is whether this loan of Rs. 80,000 is  or  is not  sufficiently dissociated from the liability of the  1st defendant  under the No. 1 and No. 2 accounts which  existed before that date, for admittedly the entire sum was utilised to discharge the debt remaining due to the Bank on  November 20, 1945. 678 Learned   counsel  for  the  appellant  raised  a  sort   of preliminary  objection that the learned Judges of  the  High Court   having  categorically  found  that  there   was   an antecedent  debt which was discharged by  the  suit-mortgage loan  only  to the extent of Rs. 59,000 and  odd  and  there being  no  appeal by the Bank against the finding  that  the balance  of the Rs. 80,000 had not gone in discharge  of  an antecedent  debt, the respondent was precluded from  putting forward  a  contention  that the entire sum  of  Rs.  80,000 covered by Exs.  A & B went for the discharge of  antecedent debts.   We  do  not see any substance  in  this  objection, because   the   respondent  is  entitled  to   canvass   the correctness  of findings against it in order to support  the decree that has been passed against the appellant. Coming now to the merits of the controversy, the matter  may be  viewed  thus.  We are now concerned  with  the  question whether Rs. 80,000 which were borrowed under Exs.  A & B and in  respect  of which a crossed draft for that sum  made  in favour  of the 1st defendant was handed over to him went  in discharge  of antecedent debts.  If the previously  existing debt  on 14.11.1945 of over Rs. 1,09,000 being the total  of the  amount due under the No. 1 and 2 accounts was one  owed to  a third party and that debt had in part been  discharged by a demand draft issued on the execution of Exs.  A & B and the creation of a mortgage by virtue of Ex.  E, there  could be  no  doubt that it would be an  antecedent  debt.   That, however, was not the case but the original indebtedness  was to the Bank itself and that was discharged by the  suit-loan from the Bank.  Learned counsel for the appellant laid great stress  on  the fact that the entirety of  the  transactions which resulted in the grant of an overdraft facility of  Rs. 1,10,000  covered  by Exs.  A, B & C should be viewed  as  a single  and entire transaction commencing from the grant  of the loans on June 6, 1945 in anticipation of security  being furnished,  right  up to the date when  the  suit-promissory notes were executed and the mortgages by deposit 679

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of  title deeds was created.  We are, unable to accept  this submission in its entirety.  It is, no doubt, true that  the transaction  with  the  Bank,  so  far  as  the  debtor  was concerned, was one by which he obtained a loan for financing the  implementation of his contract with the  Government  of India  for  the supply of black pepper but  that  by  itself would  not be sufficient to negative such a financing  being composed of independent transactions, though directed to the same  end.  Learned counsel for the appellant did  not  deny that this was possible nor did he contest the position  that if  there was a real dissociation in fact, the  circumstance that  the  creditor was the same or that the  several  loans that were made, were for fulfilling the same purpose of  the borrower  would not by themselves detract from  there  being real  antecedence for a later borrowing.  It is,  therefore, essentially  a  question of fact and the matter  has  to  be viewed with reference (a) to the nature of the transactions, and (b) the intention of the parties, and (c) the inferences to  be  reasonably  drawn from the form  which  the  parties adopted  for putting through their intention.  It is in  the context of these considerations that we are inclined to hold that  there was a real and factual antecedency  between  the loan of Rs. 80,000 for which the draft was given on November 16, 1945 and the previously existing indebtedness of Rs.  1, 09,000 and odd in the overdrafts account No. 1 and 2 of  the 1st defendant to the Bank which was discharged thereby.   On November  16, 1945 when the draft was handed over there  was admitted  a  debt  of over Rs. 1, 09,000 due  from  the  1st defendant  to the Bank.  Though there had been an  agreement that   the  title  deeds  of  the  1st  defendant’s   Cochin properties would be deposited with the Bank a security,  the same  had  not yet been done and the  loan  therefore  still continued  to  be  a loan on the personal  security  of  the debtor.   At  that date this bank draft for Rs.  80,000  was handed over to the debtor for the purpose of discharging the previous  loans due to the Bank.  Learned counsel  might  be right  in saying that the previous loan of Rs. 1,09,000  and odd 680 might have been granted in anticipation of the execution  of the  mortgage and the final determination of the  amount  of the overdraft that should be permitted to the 1st  defendant but  that  does  not by itself  conclude  the  matter.   The learned  trial  Judge negatived the plea of  the  respondent that  the  Rs.  80,000 went in discharge  of  an  antecedent liability  to  the  Bank by reason of the  evidence  of  the Secretary  of the Bank in which he stated that this  sum  of Rs. 80,000 was adjusted towards the earlier debts  statement which  was repeated by the 1st defendant himself  as  P.W.3. Learned counsel for the appellant drew our attention to this portion of the evidence and repeated the same arguments.  In our  opinion,  however,  this statement or  this  manner  of describing  how  the draft was utilised does not  by  itself militate  against  this loan of Rs.  80,000  discharging  an antecedent debt.  Factually that the loan of Rs. 80,000  was adjusted   by  the  Bank  towards  the  1   st   defendant’s indebtedness  is not correct, though it is possible that  if the  transaction took that form the submission on behalf  of the appellant would have greater force and substance.   That however, was not the form which the transaction took, and we cannot  but assume that the form reflected the intention  of the  parties.  If instead of handing over a demand draft  to the 1st defendant, which has actually happened, the Bank had credited  the amount to the 1 st defendant in his  overdraft account  then  there would have been an  unity  between  the

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transaction  which  started  on  June  6,  1945  and   which culminated in the execution of the two promissory notes-Exs. A and B and the security for the repayment thereof Ex.  E so as to render all of them a single transaction, but that  was not the method adopted by the creditor or the debtor.   When a fresh loan of Rs. 80,000 was granted under Exs.  A & B and a  bank draft for that amount was handed over, it  was  done without  taking into account the preexisting  liability  for Rs. 1,09,000 and odd owed by the 1st defendant to the  Bank, so  that  when the draft was handed over there was  a  total liability  of Rs. 1,89,000 payable by the 1st  defendant  to the Bank.  If the appellant’s father had failed to credit 681 the  demand draft into his No. 2 overdraft account which  it was   undoubtedly  within  his  power  to   do,  his   total indebtedness would have been Rs 1,89,000.    He however paid the   draft  into  his  No.  account  so  that   the   total indebtedness  to  the  Ban on the two  accounts  became  Rs. 109,000.   From No. 2 account a sum of Rs. 5,000 he drew  to discharge  ,a  liability  of  Rs. 50,000  under  the  No.  1 account.  so  that in effect No. 1 and No. 2  accounts  were fully  discharged and Rs. 29,000 became  thereafter  outside the  security created under Ex.  E by the 1st  defendant  in favour  of the Bank.  In the circumstances we consider  that the  entire  loan  of  Rs.  80,000  went  in  discharge   of antecedent  debts  though  the same was  owned  by  the  1st defendant to the same creditor. Before  concluding  it is necessary to  refer  to  variation which the High Court made as regards amount recoverable from the properties of the family in Cochin.  This was because of the  construction  and  effect  of  Ex.   J  which  was  the memorandum which evidenced the deposit of the title deeds of the  Palgh  properties  and  which  was  executed  on  April 23,1946.  Under Ex.  J the property mortgaged was not merely the  properties in Palghat but the equity of  redemption  of the Cochin properties which had been the subject of mortgage under  Ex.   F  for, Rs. 80,000.  In  other  words,  Ex.   E created also a second mortgage on the Cochin properties.  On a  construction of Ex.  J. the High Court held that the  1st mortgage    of  the  Palghat properties was  limited  to  the excess over Rs. 30,000 in the overdraft account It  followed from  this  that  the Bank could recover  from  the  Chinese properties  that  excess and this was found to  be,  looking into  the  debits of the account of the  1st  defendant,  to amount  to  Rs.  3,792/2/1 The learned Judges  of  the  High Court, therefore, granted in addition to the amounts covered by  Exs A and B a decree for Rs. 3792 /211 recoverable  from the Cochin properties.  In view of the fact that a suit  had already  been  instituted in the Palghat Sub Court  for  the entirety of the amount due to the extent 682 of Rs. 30,000 and interest due under Ex.  C & F, the learned judges  added  in  their judgment a  reservation  which  was incorporated in the decree that was drawn up in these terms:  "If  in the suit instituted by the  plaintiff               in the Palghat Sub-court the plaintiff obtains               a decree for the whole amount due under Ex.  C               and realises the same, the plaintiff will  not               be entitled to ignore the decree in this  case               in respect of the above sum Rs. 3,792/2/1  and               interest thereon". Learned  counsel for the appellant -faintly  suggested  that the  learned  Judges were in error in passing a  decree  for this  further  sum  of Rs. 3792/2/1 in this  suit.   It  is, however,  unnecessary  for us to go into the  merits  as  to

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whether the learned Judges were right in the construction of Ex.   J  and the legal results flowing therefrom as  we  are satisfied  that the appellant is not entitled to raise  this point.  This was not one of the points raised in the grounds of appeal to this Court when an application was made for the grant of a certificate of fitness, nor is this objection  to the  decree to be found in the statement of the case  filed. In the circumstances, we need say no more about it. In the result, the appeal fails and is dismissed with costs. Appeal dismissed. 683