Case: K. V. Narayanan Vs. K. V. Ranganandhan &amp; Ors

This is an appeal by certificate granted by the High Court of Judicature at Madras under Article 133(1) (a) and (b) of the Constitution of India against its judgment and decree dated December 8, 1966 in A. S. No. 609 offacts culminating in this appeal lie in a short compass and may be briefly stated thus:Kota Venkatachala Pathy whose legal representatives are the respondents herein and Kota Narayanan, the appellant herein, were real brothers being the sons of one Kota Rangaswami Chettiar. Together with their cousin Subramanyam Chettiar, the son of Kota Kuppuswami Chettiar, the brother of Kota Rangaswami Chettiar, they formed a joint family which was a trading one. Prior to 1927, Subramanyam Chettiar was the manager and karta of the family. After 1927 Kota Venkatachala Pathy took over the management of the family and its properties. By registered deed dated May 29, 1929 (Exh. A-1) a partition of joint family properties was effected between Subramanyam Chettiar on the one hand and Kota Venkatachala Pathy and his brother, Kota Narayanan, who was then a minor, on the other, each branch taking a half share. As karta of the joint family. Subramanyam Chettiar had, before November 20, 1927 incurred debts to the tune of Rs. 9, 506/- from several creditors. Five items of joint family properties detailed in Schedule D-1 to the deed of partition were earmarked for the discharge of the aforesaid debts and were given over to Kota Venkatachala Pathy who was made responsible for the discharge of the debts. These debts were discharged by Kota Venkatachala Pathy before March 26, 1934. On September 7, 1956, Kota Venkatachala Pathy brought a suit, being No. O. S. 87 of 1956, in the Court of the Subordinate Judge of Vellore, North Arcot, for partition and separate possession of 3/4th of the properties set out in Schedule A to the plaint, 1/2 of the properties set out in Schedule A-1 to the plaint and whole of the properties set out in Schedule B to the plaint. One of the items namely, item No. 1 o f Schedule B to the plaint which consists of four shops is what remains undisposed out of the properties mentioned in Schedule D-1 to the deed of partition which were set apart for the purpose of discharging the aforesaid debts incurred by Subramanyam Chettiar before 1927.The case as set out by Kota Venkatachala Pathy in his plaint was that the properties set out in Schedule B-1 to the deed of partition were given over to him absolutely for the discharge of the aforesaid debts set out in Schedule D to the deed of partition and it was provided in the said deed that either he would discharge the debts mentioned in the deed or undertake to pay the same himself within a month from the registration of the document and obtain and hand over to Subramanyam Chettiar receipts from the creditors specifically mentioned there that Subramanyam Chettiar was not liable for payment of the aforesaid debts and that if the aforesaid conditions were not satisfied by him i.e. by Kota Venkatachala Pathy and any loss was occasioned to the former, the latter would be liable for those losses. The case of Kota Venkatachala Pathy further was that since he had discharged the debts detailed in Schedule D to the deed of partition, he was entitled to the exclusive possession of item No. 1 of Schedule B to the plaint as his self acquired property by virtue of the terms of deed of partition and also to the rest of the properties detailed in the said Schedule  B as he had purchased the same with his own funds. Kota Venkatachala Pathy based his claim of 3/4th share in properties detailed in Schedule A to the plaint on the ground that he was entitled to 1/4th by birth as a coparcener and the rest of the half share allotted to Subramanyam Chettiar as he had purchased the same from auction purchasers. The relief for accounts was based by Kota Venkatachala Pathy on the ground that there was an oral division in status in 1938 and it was the appellant who was managing the properties either as a co-owner or as an agent since then.The appellant resisted the claim of extra share made by Kota Venkatachala Pathy and contended that the latter was entitled only to half share in all the suit properties. According to the appellant, the family debts set out in Schedule D to the aforesaid deed of partition was discharged by Kota Venkatachala Pathy not only by the sale of the properties set out in Schedule D-1 to the deed of partition but also by substantially utilising other joint family properties available for division. It was also contended by the appellant that since Kota Venkatachala Pathy acted as Karta of his branch, the aforesaid deed of partition should be construed as meaning that any item salvaged or saved after the discharge of the aforesaid family debts would be ancestral property and not exclusive property of the plaintiff. As regards the properties other than item No. 1 o f Exhibit B of the plaint, it was contended by the appellant that they were also to be shared half and half between him and Kota Venkatachala Pathy as they were purchased from the joint family funds. With regard to the relief for rendition of accounts, the appellant contended that he became the Karta of the joint family in 1947 and Kota Venkatachala Pathy was not entitled to the relief of rendition of account till the date of the suit when alone there was a division of status and not in 1938 as claimed by Kota Venkatachala Pathy.On a consideration of the evidence adduced in the case, the Trial Court by its judgment and decree dated September 12, 1960, held that there was no division in status till the date of the suit. With regard to item No. 1 of Schedule B to the plaint, the Trial Court held that the total amount of debts paid was Rs. 15, 669-6-2 and out of D-1 Schedule properties of the estimated value of Rs. 9, 506/- only Rs. 2, 575/- were realized from the sale of four items thereof and the balance of the debts were discharged from out of the joint family assets like jewels, outstandings realized and other immovable properties allotted to Rangaswamy Chettiars branch in 1929 partition and that the conversion of such joint family assets was made by Kota Venkatachala Pathy who was managing the family till 1957. The Trial Court accordingly held that the properties namely item No. 1 of Schedule B to the plaint should be deemed to have been salvaged by detriment to the paternal estate. The Trial Court also found that as the defendant-appellant herein was a minor at the time of 1929 partition and Kota Venkatachala Pathy, the original plaintiff had acted as his guardian, the latter must be deemed to have acted for the former also when he undertook to discharge the debts and that as between the original plaintiff and defendant to whom the properties were jointly allotted under Exhibit A-1, there was a position of implied trust in respect of properties set out in Schedule A and B to the plaint. The Trial Court also upheld the appellants plea of blending of all the properties by Kota Venkatachala Pathy. The Trial Court also found that properties covered by sale deeds Exhibit B-1 and Exhibit B-4 which originally formed part of the half share allotted to Subramanyam Chettiar though purchased by the original plaintiff in his own name were joint family properties and as such were liable to partition in equal shares. The Trial Court negatived the claim of Kota Venkatachala Pathy for a share in excess of one half in the aforesaid properties and held that he was entitled to only one half of all the suit properties. The Trial Court also decreed that the appellant shall render true and proper accounts in respect of the income and expenses regarding half share of the respondents in the properties mentioned in Schedule A, A-1 and to the plaint from 1947 onwards but did not give directions as to t he assets and funds of capital nature withdrawn by Kota Venkatachala Pathy from out of the joint family utilised for his own separate and independent business.Aggrieved by this judgment, Kota Venkatachala Pathy, the original plaintiff, whose legal representatives are the respondents herein, preferred an appeal to the High Court of Judicature of Madras. By its judgment dated December 8, 1966, the High Court allowed the appeal in part, set aside the judgment and decree of the Trial Court and decreed the suit brought by the original plaintiff with regard to item No. 1 of Schedule to the plaint holding that the properties mentioned in Schedule D-1 to the partition deed were conveyed absolutely to the original plaintiff in lieu o f his undertaking to be liable to discharge the entire debts mentioned in Schedule D to the partition deed whether the properties were sufficient or insufficient to discharge the same and if there was any surplus out of the properties he was to have the same absolutely, but if the properties were not sufficient, he was to discharge the debts on his own responsibility without making Subramanyam Chettiar liable for the same; that though a portion of the debts were discharged out of the joint family funds that only cast on the legal representatives of the original plaintiff a liability to account to the appellant for such drawings as the original plaintiff might have made and whatever amount was found to be so drawn would hav e to be debited against his i.e. the original plaintiff, after giving him credit for whatever amount he might have put into the common fund. The High Court further held that in determining the net drawals by the original plaintiff from the joint family funds, credit would be given to him for drawings made by the appellant by way of receipts of rents from item No. 1 of Schedule B to the plaint; that the original plaintiff was not liable to account for the joint family properties as there was no proof of mismanagement, mishandling or improper application of joint family properties or funds and that the defendant was also not liable to account to the original plaintiff for the management of the properties o f which he was in charge. The High Court affirmed the judgment of the Trial Court in regard to the properties covered by Exhibits B-1 and B-4 holding that these were acquired with the common funds of the original plaintiff and the appellant which he was managing. Dissatisfied with this judgment and decree, the defendant has come up in appeal to this Court.The learned counsel for the appellant has, while supporting the appeal, strenuously urged that the properties mentioned in Schedule D-1 to the deed of partition (Exh. A-1) were not intended by the parties thereto to be given to Kota Venkatachala Pathy as his separate properties but were given to him only for a specific purpose viz. for discharging the family debts; that the ancestral properties could not be converted into separate properties by means of an arrangement arrived at between Subramanyam Chettiar and Kota Venkatachala Pathy; that the character of a property has to be decided after considering whether it is saved as a result of detriment to the paternal estate and as in the instant case, property mentioned at item No. 1 of Schedule D-1 to the deed of partition was saved by using the joint family assets, the said property could not but be regarded as the ancestral property of the parties which was subject to partition. He has further urged that in any event D-1 Schedule properties lost the character of separate properties as they were blended by Kota Venkatachala Pathy with the joint family properties. He has lastly urged that the directions given by the High Court with regard to accounting cannot be sustained as they are neither clear nor justified.

Court's reasoning:
In the instant case we are unable to find that there was any intention on the part of Kota Venkatachala Pathy of abandoning his separate rights over the properties set out in Schedule D-1 to the deed of partition. The mere fact that these properties were not separately entered by Kota Venkatachala Pathy in the account books or that no separate account of the earning from these proper ties was maintained by him cannot rob the properties of their character of self acquired properties. We are accordingly of the view that there was no blending of the properties by Kota Venkatachala Pathy as contended by the appellant.The mere f act that some amount out of the joint family funds was used for discharge of the debts mentioned in Schedule to the deed of partition is also of no consequence. If any amount out of the joint family funds was used for the discharge of the outstandings payable to the outside debtors, the legal representatives of Kota Venkatachala Pathy would, as pointed out by the High Court be liable foris also no substance in the last contention advanced on behalf of the appellant. The legal position is well settled that in the absence of proof of misappropriation or fraudulent or improper conversion by the manager of a joint family a coparcener seeking partition is not entitled to call upon the manager to account for his past dealing with the family property. The coparcener is entitled only to an account of the joint family property as it exists on the date he demands partition. In the instant case there being no evidence to establish any misappropriation or fraudulent conversion of the joint family property by Kota Venkatachala Pathy during the period he acted as karta of the family, we are unable to interfere with the direction issued by the High Court which is just and proper.