Supreme Court: In a case wherein the present appeal arises out of the suit, commenced in the Court of the Subordinate Judge at Surat, for administration of the estate of Dhanjibhai Ratanji, who died intestate leaving properties, the 4-Judges Bench of Fazl Ali, M.C. Mahajan, B.K. Mukherjea* and Chandrasekhara Aiyar, JJ., held that when a co-sharer in possession of a joint estate purports to dispose of the entire property including the shares of the other co-sharers to a stranger and appropriates the entire sale proceeds, he was accountable for the money, thus received, to the other co-sharers. The Supreme Court held that subject to the modification that Rs. 1249/8 should be deducted from the amount for which Defendant 1-appellant had been held liable in respect of the mortgage debt due by Dayalji and his sons, the appeal should stand dismissed.
Dhanjibhai had no child of his own. He had five brothers and three sisters besides his wife; and four of his brothers and one of his sisters predeceased him. According to the provisions of the Indian Succession Act, 1925 (‘Act'), one half-share of Dhanjibhai’s properties devolved upon his wife Chandanbai, while the other half was inherited by his living brother and sisters and the lineal descendants of the brother and the sisters who were already dead. The original plaintiff-respondents was Byramji Mancherji, a sister’s son of Dhanjibhai, who submitted that Defendant 1-appellant, son of Pestonji, one of the deceased brothers of Dhanjibhai, in this capacity was entitled only to 2/91st share in the estate but had taken possession of all the properties on Dhanjibhai's death. It was further submitted that he had no right to do so and was accountable as an executor de son tort. It was further alleged that there was no means to know exactly what the estate available for distribution was, and a notice which was served on Defendant 1-appellant was completely ignored by him. It was for this reason that the suit was instituted.
Analysis, Law, and Decision
The Supreme Court noted that the First-Class Subordinate Judge (‘Subordinate Judge') declared that Pestonji, the natural father of Defendant 1, had all along treated Defendant 1 not as his own son but as the adopted son of Dhanjibhai and on that footing had excluded him from his property, his descendants were estopped from claiming any share in the estate of Dhanjibhai against Defendant 1, and a similar disability was attached to the other defendants who in their written statements supported the case of Defendant 1 and abandoned their claims to any share in the estate. The Supreme Court further noted that in the judgment upon which the preliminary decree was passed by the Subordinate Judge, it was expressly held that accounts were to be taken of the profits of the immovable properties which Dhanjibhai was entitled to or seised of at the date of his death, and of the proceeds of the sale of such of them as might have been found to have been disposed of by Defendant 1-appellant subsequent to his death. The Supreme Court further noted that there was an appeal against the preliminary decree to the Bombay High Court (‘High Court'), but the same was not challenged during the hearing of the appeal and the High Court affirmed it without any variation. After the case went back to the Subordinate Judge, issues were framed on the points on which enquiry was directed by the preliminary decree. The Supreme Court opined that it was not satisfied as to the correctness of the proposition of law formulated by the counsel that when a co-sharer in possession of a joint estate purports to dispose of the entire property including the shares of the other co-sharers to a stranger and appropriates the entire sale proceeds, he was not accountable for the money, thus received, to the other co-sharers and the only relief which the latter could have was to institute a suit for recovery of possession against the purchaser.
The Supreme Court opined that the court below was right in holding that a mortgage of immovable property was itself immovable property, at any rate, when the mortgage was of the usufructuary or possessory type. Under Section 58 of the Transfer of Property Act, 1882 (‘TPA'), a mortgage, whatever its form might be, operated as a transfer of interest in specific immovable property. A portion of the interest in the immovable property, which prior to the mortgage was owned by the mortgagor, thus vested in the mortgagee. It was to be noted that a debt “secured by mortgage of immovable property” had been expressly excluded from the definition of “actionable claim” in Section 3 of TPA. The Supreme Court further opined that an inference could legitimately be drawn from this exclusion that the legislature regarded such debts as “immovable property” within the meaning of Section 3(26) of the General Clauses Act, 1897 which laid down that “immovable property shall include land, benefits to arise out of land and things attached to the earth”.
The Supreme Court opined that it was on these grounds that it had been held in Parksh Nath Singha v. Nabogopal Chattopadhya, 1901 SCC OnLine Cal 140; Sakhiddin Saha v. Sonaullah Sarkar, 1918 SCC OnLine Cal 38; and Elumalai Chetty v. P. Balakrishna Mudaliar, 1921 SCC OnLine Mad 71, that “a mortgage debt was immovable property and that a transfer of mortgagee’s interest required a registered document when the value of the mortgage was Rs. 100 or upwards”. The Supreme Court noted that the High Court's finding was that, that all the mortgages existing at the date of the death of Dhanjibhai were possessory or usufructuary mortgages and in these circumstances Defendant 1-appellant must be held accountable for the rents and profits of the mortgaged properties which continued to be in his possession since the death of Dhanjibhai and which he presumably possesses even now. Thus, this part of the Defendant 1' s-appellant’s contention, therefore, could not succeed.
The Supreme Court noted that it was Defendant 1-appellant who was admittedly in possession of all the properties of Dhanjibhai since the date of his death, if not from before, and the account books were all with him. The Supreme Court opined that it was certainly open to him to produce all these account books and satisfy the court from the entries made therein that he had not received any amount due on account of the mortgages or even if he did receive anything that was less than what he had been held accountable for. The Supreme Court also opined that Defendant 1-appellant maintained an obstinately negative attitude throughout the proceedings and in these circumstances, this Court had no other alternative but to make him answerable for the principal sums secured by these mortgage deeds together with reasonable interest upon the same for a period of 6 years prior to the institution of the suit. The Supreme Court further opined that Defendant 1-appellant certainly could not make grievance of a liability being imposed upon him which he himself could have avoided if his allegations were true.
The Supreme Court noted that Defendant 1-appellant raised the contention that he was not liable for the mortgage debt, as the old mortgage in favour of Dhanjibhai was extinguished and a new mortgage came into existence after his death with regard to which the heirs of Dhanjibhai could not lay any claim. The Supreme Court stated that this contention was negatived rightly by the High Court; but the Supreme Court opined that Defendant 1-appellant could not be held accountable to the plaintiff-respondents and other heirs of Dhanjibhai for his share of the sum of Rs. 2499 which was advanced as consideration for the new mortgage after Dhanjibhai’s death. The Supreme Court observed that there was no evidence to show that this money did not belong to Defendant 1-appellant and in fact it had been held by both the Subordinate Judge and High Court that Defendant 1-appellant was not wholly without any means of his own; and several items of property which stand in his name had been held to belong to him. Thus, the Supreme Court opined that a sum of Rs 1249/8, which was half of Rs. 2499, should be deducted from the amount for which Defendant 1-appellant had been held accountable in respect of this mortgage debt due by Dayalji and his sons.
The Supreme Court further noted that the Subordinate Judge held that the lands situated in Kabilpore were purchased by Dhanjibhai for Defendant 1-appellant who was his adopted son, and they would be presumed to be the properties of the latter on the doctrine of advancement. The High Court pointed out that Defendant 1-appellant was not the son of Dhanjibhai and the principle of advancement was not applicable to India. The Supreme Court opined that the High Court seemed sound. The Supreme Court also opined that the properties stood in the name of Defendant 1-appellant and the presumption of law must be that it was his property unless the contrary was proved. The burden was on the plaintiff-respondents to show that this was a benami transaction and the money actually came from Dhanjibhai, but they did not succeed in discharging this burden. On the other hand, there was evidence to show that Defendant 1-appellant did earn some money by taking liquor contracts. The presumptions of Hindu joint family did not apply to the Parsis. The Supreme Court further noted that the High Court had pointed out that the year when these properties were purchased, other properties were purchased in Dhanjibhai’s own name. Thus, the Supreme Court opined that it would be quite a fair and legitimate inference to draw from these facts that these properties really belonged to Defendant 1-appellant.
The Supreme Court held that subject to the modification that Rs. 1249/8 should be deducted from the amount for which Defendant 1-appellant had been held liable in respect of the mortgage debt due by Dayalji and his sons, the appeal should stand dismissed.
[Dadabhai Kersasji Vandriwalla v. Hirabai, 1951 SCC 122, decided on 09-02-1951]
Note: Transfer of Property Act, 1882
Transfer of property is defined under Section 5 of the Transfer of Property Act, 1882. It refers to an act done by a living person conveying property to one or more person or by himself or by one or more living person in the present or the future. The various kinds of transfer under the Act are (a) Sale of immovable property; (b) Mortgage of immovable property; (c) Lease of immovable property; (d) Exchange of immovable property; and (e) Gift of immovable property. The term ‘property' can be broadly classified into two, namely, movable, and immovable property. The General Clauses Act, 1897 defined immovable property under Section 3(26), stating that the term shall include land, things affixed to earth or permanently fastened to anything affixed to earth, and any benefits arising out of the land. However, Section 3 of the Act did not provide an exhaustive definition and stated that immovable property was not to include standing timber, growing crops, or grass. According to Section 58(a) of the Transfer of Property Act, 1882, a mortgage was transfer of interest in specific immovable property for purpose of securing, (a) the payment of money advanced by way of loan; (b) an existing or future debt, or (c) the performance of an engagement which may give rise to a pecuniary liability.
Advocates who appeared in this case :
For the Appellant: R.J. Thakur, S.L. Chibber, Advocates
For the Respondents: M.C. Setalvad, Attorney General of India
*Judgment authored by: Justice B.K. Mukherjea