Radhakrishnadas vs Kaluram

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Civil Appeal No. 49 of 1958

Decision Date: 10 April, 1962

Coram: J.R. Mudholkar, A.K. Sarkar, A.K. Subbarao

In the matter of Radhakrishnadas versus Kaluram, the Supreme Court delivered its judgment on 10 April 1962. The judgment was authored by Justice J. R. Mudholkar, who was joined by Justice A. K. Sarkar and Justice Subbarao K. The case was reported in the 1967 AIR 574 and the 1963 SCR (1) 648, with a later citation in R 1980 SC 645 (4). The appeal, designated as Civil Appeal No. 49 of 1958, was filed against the decree dated 17 April 1954 passed by the former Nagpur High Court. The petitioner, Radhakrishnadas, contested a sale that had been executed by his father, the third defendant, and by Radhakrishnadas himself while he was still a minor. The sale deed, dated 8 April 1944, transferred the full sixteen‑annas interest in two villages—Amaldihi and Gondkhami—belonging to the joint family, together with sir and khudkashat lands, grass, kothar, gochar, rivers, brooks, wells, and “all the rights and privileges”, for a consideration of Rs 50,000. The dispute arose under the principles of Hindu law relating to joint family property, the concept of legal necessity, and the provisions of Section 49(1) of the C. P. Tenancy Act, 1920. After the execution of the deed, Radhakrishnadas instituted a suit seeking to set aside the sale on two principal grounds: first, that he was a minor at the time of execution and therefore could not be bound by the transaction; and second, that the lawful necessity for the sale amounted only to Rs 45,000, not the full Rs 50,000, and that the cultivatory rights in the sir lands were not conveyed, for which he claimed possession.

The Court held that the alienation of the joint family property was undertaken for a bona fide legal necessity and was consequently valid and binding upon the entire family. It clarified that the requirement of legal necessity does not obligate the seller to demonstrate that the entire consideration has been applied to meet family needs; it is sufficient that the transaction serves a legitimate purpose. Accordingly, the father, acting as the head of the family, possessed the authority to execute the sale deed, and the participation of Radhakrishnadas, even as a minor, did not prejudice the validity or enforceability of the conveyance. The Court relied upon earlier decisions, including Sri Krishan Das v. Nathu Ram (1 L.R. 49 All. 149 (P.C.)), Naimat Rai v. Din Dayal (1 L.R. 8 Lah. 597 (C.)), Gharib‑Ullah v. Khalak Singh (I L.R. 25 All. 407 (C.)), Kanti Chunder Goswami v. Bisheswar Goswami (25 Cal. 585), and Biraj Nopani Pura Sundary Dasee (42 Cal. 56 (P.C.)). Further, the Court concluded that the cultivatory rights in the sir lands were expressly transferred to the purchasers because the deed conveyed “all rights and privileges,” which, by natural implication, encompassed such rights. The requirement of an express agreement under Section 49(1) of the C. P. Tenancy Act was satisfied by the language of the deed, which clearly indicated the transfer of sir and khudkashat lands, both cultivated and uncultivated, together with the associated rights. Accordingly, the Court dismissed the suit filed by Radhakrishnadas, upheld the validity of the sale, and affirmed the decree passed by the Nagpur High Court. Counsel for the appellants and counsel for the respondents were instructed to appear on behalf of their respective parties.

In this case, the Court explained that the appeal was presented by way of a certificate against the decree of the High Court of Nagpur, which had dismissed the suit filed by the appellants for setting aside the sale of two villages, namely Mauza Amaldihi and Mauza Gondhami, located in Mungali tehsil of Bilaspur district. The parties agreed that these two villages, together with several other parcels, formed part of the joint‑family property of the appellants and of their father, who was the third defendant, Gorelal. On 8 April 1944, Gorelal, acting on his own behalf and also as guardian of his minor son Balramdas (appellant No. 2), executed a sale deed in the name of a major. The deed was made in favour of two purchasers: Pandit Ramlal, son of Motiram (defendant No. 2) and Kaluram (the first defendant). The total consideration mentioned in the deed was fifty thousand rupees.

The deed expressly stated that the sellers were transferring the entire sixteen‑annas interest in the villages of Amaldihi and Gondhami, together with all sir and khudkashat lands, grasslands, kothar, padia, gochar, rivers, brooks, wells, tanks, bandkies, orchards, gardens, houses and similar properties, as well as both cultivated and uncultivated lands, together with all rights and privileges attached thereto. According to the deed, the full sixteen‑annas share in Mauza Gondhami and twelve‑annas share in Mauza Amaldihi were sold to Kaluram for thirty‑seven thousand five hundred rupees, while the remaining four‑annas share of Amaldihi was sold to Pandit Ramlal for twelve thousand five hundred rupees.

From the total consideration of fifty thousand rupees, a sum of thirty thousand four hundred ninety‑one rupees and eight annas was retained by Kaluram to satisfy a mortgage decree obtained against the family by a creditor named Gayaram, relating to these two villages as well as two additional villages. An additional amount of two thousand rupees was also allowed to be kept by Kaluram for the payment of land revenue due on the villages. The remaining balance was received in cash. The sale deed further recorded that part of the money was required to meet the marriage expenses of appellant No. 1, Radhakrishnadas, and of Gorelal’s daughter Ramjibai, both described as majors.

Possession of the sold property was handed over to the two purchasers, who are respondents 1 and 2 in the present appeal. On 5 May 1945, the two appellants instituted the suit that gave rise to the present appeal. In that suit, they contended that the family’s annual income was only seven thousand rupees, and that after meeting household expenses there were only modest savings, so there was no necessity to execute the sale. They further argued that the consideration of fifty thousand rupees was grossly inadequate when compared with the value of the two villages. Additionally, the appellants asserted that appellant No. 1, who was one of the parties to the sale deed, was a minor at the time of the deed’s execution, and therefore the deed was void insofar as his interest in the property was concerned.

In the suit that gave rise to the present appeal, the property that had been sold was the subject of a dispute. It was asserted that the deed of sale did not claim to convey the rights to cultivate the sir lands situated in the two villages, and consequently only the bare ownership interest in those sir lands could have passed to respondents one and two under the deed. The trial court rejected the appellants’ allegation that there was no legal necessity for the sale. The court accepted as proved that a sum of ten thousand rupees was required to meet the marriage expenses of appellant number one and his sister Ramjibai, that a further seven thousand five hundred eight and eight tenths rupees were needed to settle various creditors, that one thousand six hundred fifty‑five and two tenths rupees were required for the payment of land revenue, and that the remaining balance was to satisfy the mortgage decree of Gayaram Sao. However, the trial court also found that appellant number one was a minor at the time the sale deed was executed, and therefore his execution of the deed was void and ineffective. Notwithstanding this finding, the court held that appellant number one was bound by the deed because his father, Gorelal, who is respondent number three, was to be deemed to have executed the sale deed in the capacity of manager of the family estate. Upon a detailed construction of the deed, the court concluded that the cultivating rights in the sir lands were not transferred by the deed. Accordingly, the court passed a decree in favour of the appellants granting them possession of the sir lands, holding that those lands had become their ex‑proprietary occupancy lands pursuant to section forty‑nine of the 1920 C.P. Tenancy Act. The appellants then appealed to the High Court against the portion of the decree that dismissed their claim to possession of their share in the villages. Respondents one and two filed a cross‑appeal. Both appeals were heard together; the High Court dismissed the appellants’ appeal but allowed the respondents’ cross‑appeal.

Before this Court, counsel for the appellants, Mr S P Sinha, accepted that forty‑five thousand rupees out of the total consideration of fifty thousand rupees had in fact been used to discharge family debts. He nevertheless argued that the sale could not be said to have been made out of legal necessity because a sum of approximately five thousand rupees, for which, according to him, legal necessity had not been established, formed a non‑negligible portion of the total consideration. The counsel’s argument rested on a misunderstanding of the applicable legal principle. Established case law, including decisions of Indian courts and the Privy Council, makes clear that the alienist is required only to demonstrate that the transaction was undertaken out of legal necessity; he is not required to prove that every portion of the consideration he advanced was actually applied to meet the family’s needs. To illustrate this point, reference may be made to the Privy Council decision in Sri Krishan Das v Nathu Ram, where the alienation consideration was thirty‑five thousand rupees and the alienist proved legal necessity only to the extent of three thousand rupees. The Privy Council held that the requirement is to establish the necessity of the transaction itself, not to account for the exact manner in which the proceeds were spent.

In the earlier case the High Court had held that the alienation could be set aside if the plaintiff paid the amount of Rs 3,000 to the aliene. The Privy Council, however, reversed that judgment, observing that the High Court had entirely misunderstood the legal principle applicable to such matters. According to the Privy Council, the aliene is required only to establish that there was a legal necessity for the transaction; once that necessity is proved, the aliene cannot be required to demonstrate how the consideration he advanced was actually applied by the alienor. The Council explained that an aliene rarely has any ability to control or direct the disposal of the money he advances unless he himself takes part in the management of the affairs. This reasoning was reiterated in the Privy Council decision in Niamat Rai v. Din Dayal, where the judges noted that the High Court had placed undue emphasis on whether some of the payments were made in discharge of debts incurred between the negotiation of the sale and the execution of the deed. The Privy Council observed that, had the High Court been satisfied that the entire sum of Rs 38,400 drawn from the sale proceeds had been used to discharge debts incurred before the negotiation, it would have upheld the sale. Even in the absence of a joint‑family business, proof that the property had been sold for Rs 43,500 to satisfy pre‑existing debts of Rs 38,000 would have been sufficient to support the sale without showing the allocation of the remaining balance, as affirmed in the recent case of Krishan Das v. Arathu Ram. Both of these authorities therefore establish the correct legal position, and consequently the argument advanced by Mr Sinha must be rejected.

The Court further noted that Radhakrishnadas had been adjudicated as a minor at the time of the transaction, and consequently the transaction could not bind his interests. It was observed that if the appellant’s father, Gorelal, who was expressly acknowledged as the manager of the family, had not joined the sale deed, the first appellant could have successfully argued that the transaction did not bind him. However, Gorelal did join as an executant of the sale deed, and that fact did not alter the legal effect. The execution of the sale deed by the father, who was the family manager, rendered the transaction binding on the first appellant in the same manner as it was binding on his brother, the second appellant, who was also a minor at the time. Although Mr Sinha contended that the requirement for the first appellant to join the transaction indicated that Gorelal could not act on his behalf, the Court rejected that contention, holding that the presence of the manager’s signature did not change the binding nature of the sale upon the minor parties.

The Court noted that the demand that appellant No. 1 join the transaction at the insistence of the alienees, respondents 1 and 2, clearly indicated that Gorelal, in executing the sale deed, neither acted for nor could act on behalf of appellant No. 1. The Court could not accept the argument that the manager’s role was limited to his own capacity. To determine whether a manager in a particular transaction purports to act on behalf of the family or in a personal capacity, the Court stated that the nature of the transaction and the purpose for which it was undertaken must be examined. A manager does not cease to be a manager simply because a junior family member, who was a major or was believed to be a major, also joined the transaction. It is not unusual for alienees to require senior family members to join transactions entered into by managers so that later objections by those members can be avoided. The Court further explained that such circumstances are relevant for the Court’s assessment of whether the transaction was legally necessary. However, the Court held that those considerations did not affect the present case. The Court found that Gorelal acted not only for himself but expressly for his minor son, appellant No. 2. The money obtained from the sale was required in part to discharge antecedent debts, in part to meet public demands, in part to pay other creditors, and in part to finance the marriages of appellant No. 1 and his sister Ramjibai. Consequently, Rs 45,000 out of the total consideration of Rs 50,000 was needed for the family’s purposes. The Court observed that even where a transaction is entered into solely by a manager, it is deemed to be on behalf of the family and therefore binding upon the family. The presence of a junior member joining the transaction does not worsen the position, and it is not fatal when the junior member’s participation fails because the member lacks capacity due to minority. In support of this view, the Court referred to three decisions—Gharib‑Ullah v. Khalak Singh, Kanti Chunder Goswami v. Bisheswar Goswami, and Bijrai Nopani v. Pura Sundary Dasee—each of which rests on the principle that if one of the executants to a sale deed or mortgage deed possesses the capacity to bind the entire estate, the transaction binds the interests of all persons having an interest in that estate. Accordingly, the Court concluded that the second contention raised by Mr Sinha was entirely without merit. Finally, the Court addressed Mr Sinha’s allegation that the High Court erred in reversing the trial court’s decree concerning the sir land. Mr Sinha emphasized that the sale deed did not expressly state that cultivating rights in the sir land were transferred, and he argued that the absence of such a recital entitled the alienor to retain possession of the sir land.

In this case the Court examined the argument that the seller was entitled to retain possession of the sir land on the basis of the exception provided in clause (a) of section 49(1) of the C. P. Tenancy Act. The Court set out the relevant portion of that provision, which reads: “A proprietor who loses under a transfer his right to occupy his sir land as a proprietor, shall, at the date of such loss, become an occupancy tenant of such sir land except in the following cases, (a) when a transfer of such sir land is made by him expressly agreeing to transfer his right to cultivate such sir land ….” The Court observed that the provision clearly requires an express agreement between the transferor and the transferee regarding the transfer of the cultivating rights in sir land. The Court then turned to the language of the sale deed that had been quoted earlier. That recital indicated that the executant of the sale deed transferred sir and khudkast lands, both cultivated and uncultivated lands, and that the conveyance was made together with “all rights and privileges.” The Court noted that if the parties had not intended to transfer the cultivating rights in sir land, the concluding words “all rights and privileges” would have been unnecessary. Each interest specified in the recital was therefore governed by those concluding words. In the absence of the phrase “all rights and privileges,” the conveyance would have affected only the proprietary interest in the sir land. The Court asked what effect the addition of those words had. Counsel for the appellant, Mr. Sinha, submitted that the words merely emphasized that the entire proprietary interest in the sir land was being transferred, and that if that meaning were accepted the words would be redundant. The Court rejected that view, stating that it would be inappropriate to interpret a formal document in a way that makes essential language meaningless. Rather, when a person transfers sir land together with the phrase “all rights and privileges,” the transfer includes everything the transferor possesses in that land, which necessarily comprises the cultivating right. Consequently, after such a transfer no interest in the sir land remains with the transferor. Mr. Sinha further argued that the statute’s requirement for an express transfer of cultivating rights obligates the parties to state clearly in the instrument that such rights are transferred. The Court saw no reason to impose that additional interpretative requirement on clause (a) of section 49(1). The Court explained that the statutory language merely means that a transfer cannot be implied; it must be expressed. Finally, Mr. Sinha contended that the words “all the rights and privileges” in the deed were not intended to govern the interests listed immediately before them but only the subsequent description of specific plots. The Court found this construction untenable and proceeded to reject the appeal.

In this case the Court observed that the introductory recital did not control the interests that were described in the clause that came immediately before those words; rather, the recital was intended to control the words that followed it, specifically the expression “sixteen anna in muza Gondkhami and twelve anna in mauza Amaldihi to Seth Kaluram etc.” The Court further explained that if the recital were read as applying to the preceding clause, the result would be a phrase that lacked any sensible meaning. Moreover, such a reading would be grammatically incorrect because it would try to apply the same phrase to the earlier wording “sixteen anna in mauza Gondkhami and twelve anna in mauza Amaldihi etc.”, which the language of the document does not support. Consequently the Court found that the appeal contained no substantive issue that could be entertained. Accordingly the Court ordered that the appeal be dismissed and that the costs of the proceedings be awarded against the appellant. The appeal was therefore dismissed.