Ramachandran Nair v. Krishnan — 1962 DIGILAW 199 (KER)

Judgment :- 1. This appeal comes up before us on an order of reference passed by Velu Pillai, J., on 21st May 1962. The learned judge has formulated the question for decision as "Whether the acquisition of a mortgage right can constitute legal necessary to support a sale of tarwad property for the purpose." 2. The 3rd defendant is the mother of the plaintiff-appellant and defendants 5 and 6, and the 4th defendant is the husband of the 3rd defendant and the father of the appellant and defendants 5 and 6. The thavazhi of the 3rd defendant obtained the plaint property under Ext. X partition deed. This property, a garden land having an extent of 14 cents situated near the Railway Station at Chirayinkil, was sold on 10-10-1118 in favour of defendants 1 and 2 who are two of the respondents in this appeal by the 4th defendant acting on the authority conferred on him by Ext. III power-of-attorney executed in his favour by defendants 3, 5 and 6. The sale was for a consideration of Rs. 4721/2 and Rs. 375/- out of the same was utilised for acquiring a mortgage right over certain paddy lands having an extent of 60 cents. Ext. II is the mortgage. The remaining Rs. 971/2 was received for the purpose of meeting the registration expenses for Exts. I and II. 3. The two courts below have held that Ext. I sale deed was executed for legal necessity binding on the tarwad and have accordingly dismissed the suit. 4. It is clear that Ext. I sale deed was executed for the purpose of acquiring Ext. II mortgage right. It is also stated in Ext. II that the sum of Rs. 375/- paid for acquiring Ext. II is out of the consideration received under Ext. I. We are in agreement with the lower appellate court which has found that Ext. I is fully supported by consideration. This leads us to the question of the 'legal necessity' for the sale. 5. The view has been taken in Karunakaran Pillai v. Devaki Pillai (1953 KLT. 452) that the acquisition of a mortgage right by the sale of tarwad property would not constitute legal necessity binding on the tarwad. This is a Bench decision and it has been followed by three learned judges of this Court in three decisions reported in Sreedharan v. Chellappan (1959 KLT. 452) that the acquisition of a mortgage right by the sale of tarwad property would not constitute legal necessity binding on the tarwad. This is a Bench decision and it has been followed by three learned judges of this Court in three decisions reported in Sreedharan v. Chellappan (1959 KLT. 897), Kochukunju Kurup v. Chandramathiyamma (1959 KLT. 912) and Chandrasekhara Pillai v. Koshi (1961 KLT. 1018). There is also a decision of the Travancore-Cochin High Court in Sreedharan v. Parvathi Gowri (S.A.No.72 of 1950) where the same view has been taken following Karunakaran Pillai v. Devaki Pillai (1953 KLT. 452). S.A. No. 72 of 1950 is short-noted at page 5 of the Short Notes in, 1954 K.L.T. 6. The rule in such cases is stated, if we may say so with respect, very clearly by Sankaran, J., (as he then was), in these terms: ... an alienation of immovable properties of the tarwad by competent persons and for the purpose of acquiring other properties for the tarwad, can be upheld only if such acquisition has been to the manifest advantage of the tarwad. This leads on to the further question as to the nature of the acquisition contemplated by the rule. Can such acquisition include acquisition of mortgage rights, lease-hold rights, etc., or should such acquisition be necessarily acquisition of immovable properties? We think that the acquisition contemplated by the rule is the acquisition of immovable properties because otherwise the rule intended to conserve the interests of the tarwad could be easily defeated by alienating immovable properties of the tarwad and utilising the consideration for acquiring other rights which though property in the eye of law, may at the same time be only precarious and doubtful rights. If the property acquired is only a mortgage right or a lease-hold right the karnavan alone could give a valid release of the rights under such mortgage or lease and the consideration thus obtained under it will be at his complete control. If he does not invest such money in any immovable property, but utilises if for his own benefit or otherwise squanders it away, the tarwad will not be able to trace that amount and to recover the same. Thus by adopting such a circuitous method, the interests of the tarwad could be easily defeated. If he does not invest such money in any immovable property, but utilises if for his own benefit or otherwise squanders it away, the tarwad will not be able to trace that amount and to recover the same. Thus by adopting such a circuitous method, the interests of the tarwad could be easily defeated. To make an acquisition with such potential dangers cannot certainly be said to be an acquisition to the manifest advantage of the tarwad. On the other hand, such an acquisition will clearly be to the manifest disadvantage of the tarwad and as such the making of such an acquisition cannot be said to be a valid necessity binding on the tarwad. Where immovable properties of the tarwad are alienated by competent persons for the purpose of acquiring other properties, the fresh acquisitions should also be necessarily immovable properties so that the alienation of such properties also could be made subject only to the limitations imposed by S.25 of the Nair Act and consistent with the dominant intention underlying S.25 of protecting the interests of the tarwad." 7. S.25 of the Nayar Act, II of 1100, enacts: "Except for consideration and tarwad necessity and with the written consent of all the major members of the tarwad, no karnavan or other managing member shall sell tarwad immovable property or mortgage it with possession for a period of more than twelve years, or lease it for a period of more than 12 years." Ss. 26 and 27 provide that no mortgage with possession for 12 years or less, or lease with premium for a period of 12 years or less, or a debt contracted by the karnavan, shall be binding on the tarwad unless such transactions are supported by consideration and tarwad necessity. In the case of mortgages or leases with premium, for a period of 12 years or less, there is a presumption of necessity if the transaction has the written consent of the senior ananthiravan of the karnavan's thavazhi and of every thavazhi collateral to the same. There is also a presumption in the case of mortgages without any term, of leases for a period of 12 years or less without any premium and in the case of debts, where the existence of tarwad necessity is alleged by the karnavan. There is also a presumption in the case of mortgages without any term, of leases for a period of 12 years or less without any premium and in the case of debts, where the existence of tarwad necessity is alleged by the karnavan. There is no such presumption of necessity in the case of a sale though the written consent of all the major members of the tarwad is insisted upon in the case of a sale, by S.25. Tarwad necessity for a sale of tarwad property has therefore, to be established by the alienee when the sale is impugned by the tarwad. 8. 'Legal necessity' has assumed various shapes and forms, and the particular one on the basis of which the transactions in question are sought to be supported is the rule that has been accepted that there can be an alienation of tarwad property for the purpose of acquiring other properties if such alienation and acquisition are to the manifest advantage of the tarwad. This is a special rule is seen from the decision in Cheera v. Vasudeva Kammathi (XXVIII TLJ. 489): "Acquisition of fresh property for the tarwad by alienating tarwad property is considered as binding on the tarwad only under special circumstances when such a fresh acquisition was to the manifest advantage of the tarwad." The enquiry in these cases must necessarily, therefore, be as to whether the sale and the acquisition of the mortgage right is to the manifest advantage of the tarwad. Such sale and acquisition, it is pointed put in Karunakaran Pillai v. Devaki Pillai (1953 KLT. 452), "do not necessarily come within the course of management of the tarwad." 9. Manifest advantage to the tarwad, we think, cannot be temporary benefits that may result to a tarwad in that the property over which the mortgage right is acquired can be more conveniently enjoyed or that a better yield is obtainable from the property so acquired than from the one that is sold. These are transient because the mortgage may be redeemed at any time. Such benefits may be considerations, and perhaps, weighty considerations, in determining whether a sale of the full rights over the property owned and possessed by the tarwad for the purpose of acquiring the full rights over other properties also to be owned and possessed by the tarwad is beneficial to the tarwad. Such benefits may be considerations, and perhaps, weighty considerations, in determining whether a sale of the full rights over the property owned and possessed by the tarwad for the purpose of acquiring the full rights over other properties also to be owned and possessed by the tarwad is beneficial to the tarwad. But when a mortgage right is acquired more paramount factors arise for consideration. The statute, Nayar Act II of 1100, has insisted in S.25 that an outright sale can only be with the written consent of all the major members of the tarwad. In the case of a mortgage right, as has been pointed out by Sankaran, J., in Karunakaran Pillai v. Devaki Pillai (1953 KLT. 452) "If the property acquired is only a mortgage right or a lease-hold right, the karnavan alone could give a valid release of the rights under such mortgage or lease and the consideration thus obtained under it will be at his complete control." This is a very important factor and we took the view in Ramakrishnan Nair v. Cherian Joseph 1962 KLT. 540 - (A.S. No. 239 of 1958) that where the effect of a sale of tarwad property is to give the karnavan full control over the sale consideration, the sale cannot be said to be to the manifest advantage of the tarwad. This view has also been expressed by Vaidialingam, J., in Kochukunju Kurup v. Chandramathiyamma (1959 KLT. 912). It seems to us, therefore, clear that the sale of tarwad property for the sole and exclusive purpose, as it is in this case, for acquiring mortgage rights over other properties cannot be to the manifest advantage of the tarwad. But reliance has been placed by counsel for the respondent on the decisions in Gowrikutty Pilla Thankachy v. Velayudhan Pillai (1957 KLT. 577) and Rugmani Amma v. Parvathi Pilla (A. S. No. 575 of 1953) for the proposition that tarwad property can be alienated for the purpose of acquiring a mortgage right. We do not think that any, such rule has been laid down in those cases. In 1957 KLT. 577) and Rugmani Amma v. Parvathi Pilla (A. S. No. 575 of 1953) for the proposition that tarwad property can be alienated for the purpose of acquiring a mortgage right. We do not think that any, such rule has been laid down in those cases. In 1957 KLT. 577, there has been no acquisition of any mortgage right by the sale of tarwad property and on the facts and circumstances of the case, it was held that the sale of a small bit of land for the purpose of acquiring necessary implements for cultivating other tarwad property was essential for the tarwad and that the transactions were, therefore, supported by legal necessity. In the decision in Rugmani Amma v. Parvathi Pilla (A.S. No. 575 of 1953), what was sold was the equity of redemption over properties which were outstanding on mortgage and over which the mortgagees had effected improvements to the value of Rs. 5000/- and where on the evidence it was clear that the tarwad had not the means to redeem the mortgage paying the mortgage money and the value of improvements. The decisions in these two cases have turned on the facts of those cases and it has not been laid down therein that the sale of tarwad property for the exclusive and sole purpose of acquiring mortgage rights can be said to be to the manifest advantage of the tarwad. In any view of the matter, we prefer to follow the fairly long line of decisions following the rule in Karunakaran Pillai v. Devaki Pillai (1953 KLT. 452). 10. In the view we have taken, we are not impressed by the arguments of the respondents' counsel that the property over which the mortgage right his been acquired was situate near another property that has been gifted to the third defendant by her mother's second husband and that the mortgaged property yielded more than the properties sold. Nor do we think that the fact that the husband of the 3rd defendant, the father of the plaintiff-appellant, was employed at Neyyur and had to spend at least Rs. 8 1/2 to reach the property that has been sold to collect the meagre usufructs therefrom should outweigh the more fundamental considerations which we have mentioned earlier in this judgment in deciding whether the transaction is to the manifest advantage of the tarwad. 8 1/2 to reach the property that has been sold to collect the meagre usufructs therefrom should outweigh the more fundamental considerations which we have mentioned earlier in this judgment in deciding whether the transaction is to the manifest advantage of the tarwad. Affording the karnavan or the managing member the facility to dispose of the assets of the tarwad without the consent or even knowledge of the other members of the tarwad cannot certainly be to the advantage of the tarwad much less to the manifest advantage of the tarwad. This is not consistent with the object of S.25 of the Nayar Act. Such transactions can lead to the dissipation of the assets of the tarwad. We hold, therefore, that Ext. I is not supported by legal necessity and set aside the document. 11. The trial court, in this case, has fixed the value of improvements in the plaint property at Rs. 2873-8-4. The value of improvements in the property will have to be ascertained afresh applying the provisions of Act XXIX of 1958. We have already held that the document, Ext. I, is fully supported by consideration. We are of the view that the full value of improvements and the consideration of Rs. 4721/2 should be paid to the alienees, defendants 1 and 2, before recovery of the possession of the property by the plaintiff is permitted. We, therefore, grant a decree in favour of the plaintiff - appellant holding that Ext. I sale deed is not binding on the tarwad and allow him to recover possession of the property after payment to the alienees, defendants 1 & 2, the sale consideration of Rs. 4721/2 and the value of improvements ascertained by the trial court in the manner indicated above. We set aside the decrees of the courts below and remit the case to the trial court for fixation of the value of improvements. We direct the parties to suffer their costs throughout. Allowed.