Ram Nath And Anr. vs Chiranji Lal And Anr. on 3 October, 1934
| Citation | AIR 1935 All 221, 155 and 136 |
| Date of judgement | 3 October, 1934 |
| Court | Allahabad High Court |
| Case type | Civil |
| Plaintiffs | Ram Nath and ors |
| Defendants | Chiranji Lal and ors |
| Judges | C.J Sulaiman, Rachhpal Singh. |
| Referred | Hindu law |
FACTS OF THE CASE
The case revolves around a mortgage deed from 9th December 1918, executed by the deceased father of the defendants in favour of the deceased predecessor of the plaintiffs, who are now acting as executors. The mortgage deed stated that the money was required to pay off a previous debt and for the establishment of two shops in Muttra and Delhi.
On 28th June 1922, the mortgagor made a payment of Rs. 3,000 to the mortgagee, without specifying which part of the mortgage debt it should be applied to. It has now been discovered that the shop in Muttra was an ancestral lace shop, while the shop in Delhi was a family business but not ancestral, although it had been in operation for several years prior to the mortgage deed.
ISSUES
- Whether the sons are liable for the repayment of the loan contracted by their father if the business financed by the loan is a family business ?
- Whether Rs. 3,000 payment should be considered a partial repayment of the debt incurred for the benefit of the ancestral property and the debt for advancing the Delhi business ?
ARGUMENTS
Plaintiffs argued that Hindu law states that debts contracted by a managing member of a joint family are binding on the other members of the family.The family property is held by the profits earned in the business and it would therefore be unjust to hold that members who were being maintained by the profits made out of the business should not be liable for the debts incurred for the carrying on of that very business.
Defendants argued that the interest of the members of the family in a business is property just as the rights in any other kind of property.The minor sons are not liable for the If repayment of the loan contracted by their father without their consent. The business for which the money was borrowed is a new and non-ancestral business started by the father, then, the sons are not liable for the payment of the loan contracted by the father unless it be established that the transaction was for the benefit of the family and estate or was for legal necessity.
JUDGEMENT
It is found that the Delhi business was started by the manager out of the income of the ancestral family business at Muttra then the Delhi business, according to Hindu Law, would be considered to be ancestral family business of the joint family. If the business is started by a manager without any money from the family assets, then, it will be a new business. In that new business the other members will have no right nor will any liability attach to them in respect of it.But here the business started in Delhi is not a new business.The payment of Rs. 3,000 should be considered to be repayment of the debt. Sons are liable for the payment of the loan contracted by the father for this business, as the transaction was for the benefit of the family.
References
written by Sharlika Chavan from ILS law college, Pune. Intern at Legal Vidhiya
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