Case: Nanchand Gangaram Shetji Vs. Mallappa Mahalingappa Sadalge

This is a plaintiffs appeal by special leave directed against a judgment of the High Court of Mysore. The following pedigree table will be helpful in understanding the facts leading to this appealin 1922)|-------------------------------------------------| | |Mallappa Appasaheb Neelkanth (died = Smt. BalabaiDefendant Defendant on July 8, 1946) (wife of NeelkanthNo. 1 No. 2 | Defendant No. 4)ChandrakantDefendant No.The respondents are Hindus governed by Mitakshara School of Hindu Law. Mahalingappa, the prepositus of the joint family died in 1922, survived by three sons, namely, Mallappa, defendant No. 1, Appasaheb, defendant No. 2, Neelkanth (the sons are hereafter referred to as M, A and N). Mahalingappa and his sons constituted a joint Hindu family. The family was trading in tobacco. Mahalingappa, as karta was managing the joint family business. After his death, his eldest son Neelkanth, father of Chandrakant, defendant No. 3, began to look after the management of the family business.N also started C. N. Tennis Bidi Factory in the name of his son Chandrakant in 1942 or thereabout. N died on July 8, 1946. Thereafter A defendant No. 2 continued and managed the joint family business and the family concerns with the consent of the other members. After 1951, the family business was managed by M (defendant No. 1).3. The appellant had business dealings in tobacco and money dealings with the defendants joint family. There used to be periodical verification of accounts and acknowledgements were made from time to time by the manager of the family. The plaintiffs accounts were burnt in fire on October 22, 1949 and he had to reconstruct the accounts from available information and documents.4. On April 15, 1953, accounts were taken, and the amount due from the defendants family to the plaintiff was worked out and verified. The accounts thus stated were acknowledged and signed by defendant No. 1 and by defendant No. 4, as guardian of her minor son, defendant. No. 3. A balance of Rs. 69, 465/15/- was found due to the plaintiff from the defendants.5. With the preceding allegations, the plaintiff, on January 28, 1954, instituted the suit for the recovery of Rs. 75, 000, comprising of Rs. 69, 465/15/- as principal plus interest at 12 per cent per annum. Subsequently, by an amendment of the plaint, he added an alternative ground that if the defendants proved that there had been a partition in the family, they were still liable for the dues pertaining to the ancestral business carried by all the defendants either as members of the joint Hindu family or as partners of a firm.6. Defendants Nos. 1 and 2 in their joint written statement, admitted that there was an ancestral tobacco business of the family managed by N till his death in 1946; that after Ns death, the family business was managed by them (M and A) and that all the defendants were jointly liable for the plaintiffs claim. The defendants denied that there was ever a partition of the joint family. They however conceded that a deed of partnership, an agreement and a partition award had been brought into existence from time to time with the sole object of lessening the burden of Income-tax, and they were not intended to be acted upon. It was added that after the interim attachment of the property defendant No. 3, taking advantage of these bogus documents, obtained an ex parte decree to show that there had been division of the joint family, and that this decree was not opposed by the answering defendants because they were assured that it would not be executed. They admitted that the appellants claim was partially true, but denied correctness of the total balance claimed as due. They further averred that the suit was time barred as the acknowledgment relied on by the plaintiff was not legal and could not extend limitation, that interest was wrongly calculated, that if they (defendant Nos. 1 and 2) were held liable, they should be allowed to pay in easy instalments.7. Defendant No. 3 filed a separate written statement. He resisted the plaintiffs claim, traversed the allegations in the plaint, and denied that there was any acknowledgment made on his behalf on April 15, 1953 by his mother, defendant No. 4. In the alternative, he pleaded that she had no authority to acknowledge the debt so as to bind him as he was then a minor. Defendant No. 3 further stated that there was a disruption of the joint family status on November 4, 1945 when M, A and N unequivocally expressed their intention to separate, and divided the movables, and thereafter, a decree for partition of the immovable property of the family was passed in 1949 on the basis of an arbitration award. Defendant No. 3 asserted that this decree had been acted upon by the parties. He denied that defendants Nos. 1 and 2 had every acted manager of the joint family with the consent of the other members, and added that this question could not arise because of the earlier division of the family.8. Defendant No. 4 in her written statement denied the plaintiffs claim and supported the contention raised in his written statement by defendant No. 3. She stated that defendants Nos. 1 and 2, had taken her thumb impression on certain papers with the representation that they had been properly managing the Tennis Bidi Factory which had fallen to the share of her husband. She was never informed of the contents of the documents by the defendants, who took undue advantage of her illiteracy.9. The trial Court held that the joint family had disrupted in 1945 and the plaintiff was aware of this fact, that the acknowledgments of the debt had been made by defendants Nos. 1 and 2 and not by defendant No. 3, and on that account the suit was within time only as against defendants Nos. 1 and 2; that defendant No. 3 had on attaining majority repudiated his liability as partner; that the thumb impressions of defendant No. 4 on the acknowledgment had been taken by practising fraud; that in any case defendant No. 4 had no authority of acknowledge the debt on behalf of her minor son. The Court, however, upheld the appellants contention that the old accounts had been destroyed in fire and that the plaintiff was entitled to interest at 12 per cent per annum. On these findings, the trial Court decreed the plaintiffs claim in toto against defendants Nos. 1 and 2 but dismissed it against defendants Nos. 3 and 4.10. Against that judgment and decree of the trial Court, the plaintiff preferred an appeal to the High Court. The High Court has affirmed the findings of the trial Court and dismissed the appeal.11. Hence this second appeal by the plaintiff.12. Defendants Nos. 1 and 2 did not appeal against the decree of the trial Court which had consequently become final against them.13. It is common ground between the parties that during the lifetime of Mahalingappa, the family consisting of Mahalingappa and his sons, was a joint Hindu family trading in tobacco. It is further not disputed that after the death of Mahalingappa, the surviving coparceners continued to be joint, and Neelkanth, the eldest son of mahalingappa managed the family business as karta till November 4, 1945.

Court's reasoning:
33. In our opinion, it was not unreasonable to hold that the recital in this resolution with regard to defendant No. 2 being the authorised manager of the joint family, was made as a matter of expediency, did not discount the case of defendant No. 4 that the joint family had disrupted on November 4, 1945.In view of all that has been said above, we are of opinion that the concurrent finding of the courts below to the effect, that the joint Hindu family of the defendants had disrupted on November 4, 1945, does not suffer from any legal infirmity or gross error which would justify our interference in this appeal by special leave. We therefore take it that no joint Hindu family of the defendants, nor any joint business of such a family was in existence either on October 15, 1949 when the last dealing (vide Ex. 394) of the plaintiff with defendants Nos. 1 and 2 took place, or when on April 15, 1953 the accounts were stated and admitted. Indeed, on the date, April 15, 1953, on which the plaintiffs cause of action arose, even the partnership was not in existence, the same having stood dissolved since April 20, 1951.It is therefore the duty of the creditor to ascertain after due enquiry whether the person making the acknowledgment still holds his representative capacity as karta of the family. The law does not cast any duty upon the members of the family who do not figure in the endorsement or writing admitting the debt to inform the creditor by a general notice about the disruption of the family. If the creditor fails to make an enquiry and satisfy himself about the capacity of the executant to represent the family at the time of making the acknowledgment, he does so at his own peril. Disruption of the joint family status as already noticed puts an end to the representative capacity of the karta and any acknowledgment of a debt made by him after such disruption, cannot save the creditors claim from becoming time barred against the other members.45. The above enunciation of the law is in accord with the view taken by a Full Bench of the Madras High Court in Rengaswami Ayyangar v. Sivprakasam Pillai (supra) and by a Division Bench, consisting of Varadachariar and Abdur Rahman, JJ. in Muthyala Ramachandrappa v. Muthyala Narayanappa (supra), and by a Division Bench of the Orissa High Court in Pramod Kumar Pati v. Damodar Sahu (supra).46. We approve of the law enunciated on the point by the High Courts in these cases.