Holding

The sale deed was invalid as an imprudent transaction with grossly inadequate consideration, and the High Court's reversal was set aside, restoring the trial court's decree.

Summary

The Karta of a joint Hindu family, K.V. Purushotham, incurred large debts in a personal fungi business and, together with his brother, executed a sale deed on 22 August 1955 transferring almost the entire family property for a nominal Rs.16,500, purportedly to discharge those debts. The sons of the Karta and his brother challenged the sale as an imprudent alienation with inadequate consideration and alleged that many of the cited debts were fictitious. The trial court set aside the sale, but the Madras High Court reversed that finding, holding the price reasonable and the debts antecedent. On appeal, the Supreme Court examined the evidence, including a contested inland letter, and held that the consideration was grossly inadequate, the transaction was a sham to evade creditors, and the sale could not be upheld. Consequently, the Court restored the trial court’s decree, declaring the sale void and refusing any equitable relief to the purchasers.

Issues considered

The validity of alienation of joint Hindu family property by the Karta for payment of antecedent debts.
Whether the consideration of Rs.16,500 for the property was adequate and constituted a prudent transaction.
The definition and applicability of "antecedent debt" under Hindu law.
The admissibility and weight of the inland letter (Ext. B‑54) as evidence.
Whether the High Court erred in reversing the trial court's findings of fact.

Legislation cited

Constitution of Indias. Article 133
Provincial Insolvency Acts. 54
Transfer of Property Act, 1882s. 53, s. 54

Subjects

Joint Hindu familyKartaAlienation of propertyAntecedent debtInadequate considerationImprudent transactionHindu lawTransfer of Property ActPious obligation

Judgment

.· 109 A

PRASAD & ORS.

v.

V. GOVINDASWAMI MUDALIAR & ORS. B
December 8, 1981

[D.A. DESAI AND R.B. MISRA, JJ.)

Hindu Law-Joint Hindu family-A11cestral business carried on-Karla start-
ing a new business-Incurring debts alienation of joint family property by karta c
- and his brother for liquidation of debts-Alienation assailed by sons-Alienation-
Whether valid. ,,.,,

Hindu Law-Antecedent debt-What is-Debt whether to be antecedent in
fact as well as in time-Whether to be independent of and not part of the rransac-
tion impeached.
D
Hindu Law-Alienation of joint hindu family property-Validity of aliena-
tion assailed-Legal necessity and adequate consfderation-Proof of-Whether
required.

Constitution Df India 1950, Art. !33-Findings of fact-Supreme Court-Inter-
ference by-When arises. B
-· The Karta of a Joint Hindu Family was in sole management of the entire
family affairs and he brought up his younger brother. The ancestral family
business (Kulachara) was that of tobacco and money lending. After sometime

-- the Karta started a new business of fungi. Jn connection with this new venture he
borrowed money from others either on promissory notes or on the security of the
family properties. He suffered Joss in the new business. When his creditors
began to press him for immediate discharge of the debts the Karta and his
F

brother on their behalf and on behalf of the other minors in the family entered
into a written agreement on 7th July, 1955 (Ext. B-4) with Govioda Swami
Mudaliar and his two brothers whereby they agreed to sell their almost
entire property for a sum of Rs. 14,000 to discharge their debts.
Pursuant to this agreement a sale deed was executed on 22nd August, 1955 G
(Ext. B-5) for an enhanced consideration of Rs. 16,500. The sale deed referred
to the various debts including the mortgage debts owed by the vendors which
were to be discharged by the vendees and the balance if any to be paid to the
vendors. The veodees were asked to pay off the mortgage debts mentioned in
the sale deed in the first instance if they had no sufficient funds to clear off all
the debts. H
The sons of the· Karla and those of his brother filed two suits, suit No. 107
of 1958 and suit No. 108 of 1958 respectively challenging the sale deed dated 24n<l
110 SUPREME COURT REPORTS (1982] 2 S.C.R

A August, 1955 (Ext. B-5) and the mortgage deed of 2nd March, 1952 (Ext. B-49),
and claiming partition.

In suit No. 107 of 1958 the Karta and his brother were Defendant Nos. I
and 2, the three minor sons of the Karta's brother, Defendant Nos. 3 and 5 and
the vendees Defendant Nos. 6 to 8, the mortgagee, Defendant No. 9 and the
official Receiver, Defendant No. 10. In suit No. 108 of 1958 the three minor
B sons of the Karla's brother were the plaintiffs and the plaintiffs and other defen-
dants of suit No. 107 of 1958 were impleaded as defendants.

It was alleged in the suits that the father of the plaintiffs (Karla) started a
new business of lungi which was not the ancestral busiuess of the family, and
that in connection with the new venture he borrowed large sums of money. He
c sustained heavy losses, and when the mortgagees and unsecured creditors started
pressing for immediate discharge of the debts he executed first an agreement to
sell and then a registered sale deed for a nominal consideration of Rs. 16,500
which was grossly inadequate and extremely low considering the extent of the
land and the ancestral house and its market value. It was further alleged that
except the two mortgages mentioned in the sale deed the other debts shown as
consideration for the sale were false and fictitious, that the said mortgages were
paid by defendants 6 to 8 out of the standing crops, and that there was absolutely
D no necessity for borrowing the large sums considering the large income from the
joint family properties.

A third suit (suit No. 4 of 1960) was filed by a creditor of the Karla and
his brother against the vendees, alleging that the Karta had borrowed a sum of
Rs. 1000 and executed a bond for that amount and that barring some payments
a substantial amount was due on account of principal and interest and that the
E Karla executed a sham, nominal and fraudulent sale deed in respect of the family
property in favour of the defendant with an intent to defeat and delay his credi-
tors, and that property worth Rs. 50,000 was alienated for a nomin<al price.

The claim of the plaintiffs in the suits was resisted and contested by the
transferees, alleging that the alienation by the Karla was for payment of antece-
F dent debts which were untainted by immorality. The father under Hindu Law
possessed a special power to alienate joint family property including the shares of
his sons for payment of his own debts not incurred for immoral or illegal purpo-
ses and that in exercise of that power the Karta had sold all his interest and the
interest of the minor sons, that an agreement of sale was first entered into and
later on a sale deed was executed pursuant to the agreement for sale.

G The trial court held that at the time of execution of the sale deed Ext. B-5,
the 4th defendant that is the Karla owed some creditors in whose favour he had
executed promissory noies and the bond debts involved in Ext. A-7 to A-11; but
no provision at all had been made for these creditors either in the agreement of
sale or in the sale deed. The letter by the Karta dated 27th July, 1954 (Ext. B-54)
alongwith other oral evidence clearly established the intention of the Karla to
H defeat and delay the claim of some of the creditors in screening his property by a
nominal sale in favour of defendants I to 3. The sale deed is true and supported
by consideration but only partly, and that it is liable to be set aside wholly as
PRASAD v. V.G. MtiDALIAR Iii
an imprudent transaction. The mortgage deed is true and binding only so far as A
the shares of the Karta and his brother are concerned. The alienees under the
sale transaction were not entitled to any equities.

On these findings, the trial Court pas,ed a preliminary decree for partition
and division after setting aside the sale tramaction the alienees being directed to
work out their own remedies. The alienation dated 2nd March, 1952 was decla-
red binding only on the shares of the Karta and his brother to the extent of
B
Rs. 2,000. The Court however declined to give any relief to the alienees even in
respect of the amount actually paid by them to discharge some of the debts in-
curred by the Karta on the ground that the transaction had been vitiated by
fraud.

The alienees defendants preferred appeals to the High Court but the mort-
gagee submitted to the judgment and decree and did not prefer any appeal pre-
sumably because he could realise the amount due to him by virtue of the

- decree granted to him,

The High Court reversed the findings of the trial court in suits Nos. 107
and 108 of 1958 and set aside the decrees but confirmed the finding and decree D
in suit No. 4 of 1960, holding that the purchase of the suit land was for a
reasonable price and the consideration of Rs. 16,500 was not a grossly low price.
The lungi business started by the Karta was a new venture and not his family
business. The debts mentioned in Ext. B-5 were antecedent debts from the
point of view of the plaintiffs in suit No. 107 of 1958 and were binding on them.
The debts evidenced by Exts. B 13 and B 14 were genuine debts and the aliena-
tion, Ext. B 5 was binding on the plaintiffs in the two suits as the sale deed was E
executed by their father in discharge of antecedent debts.

In the appeals to this Court it was contended on behalf of the appellants
that the High Court had omitted to take into consideration various circumstan-
ces considered by the trial court and as such the findings of the High Court
on material issues were vitiated, that the High Court omitted to consider whether
--. ..
the impugned sale was an imprudent transaction, if not fictitious. On behalf of F
the respondents it was contended that the findings recorded by the High Court
were pure findings of fact based on appraisal of evidence and this Court cannot
reverse the findings recorded by the last court on facts

Allowing the appeals

HELD : I. On the evidence both oral, documentary and circumstantial
the trial court was right in holding that the sale deed is true and that it is
supported by consideration but only in part and that even the recited considera·
tion in the sale deed is thoroughly inadequate and that the sale deed was execu-
ted only nominally for a collateral purpose and with .a view to stave off credi-
tors. [134 DJ
H
2. The contention of the counsel for the respondents that finding of fact
cannot be interfered with by the Court has no force, as the finding is being
112 SUPREME COURT Rili>oR.ts (1982.J i s.C.R.
A reversed on the ground that material circumstances had been ignored by the
High Court. [134 F]

In the instant case, there is no question of giving any equities to the vendee
even if some of the amount paid by the veodee to some of the creditors of the
Karla were genuine. [134 G]
8 3. The finding that the consideration for the sale deed was thoroughly
inadequate, is correct and the sale therefore cannot be upheld. [138 DJ

4. In order to uphold an alienation of a joint Hindu family property by
the father or the manager it is not only necessary to prove that there was a legal
necessity but also that the father or the manager acted like a prudent man and
did not sacrifice the property for an inadequate consideration. [137 H-138 A]
a
Io the instant case, the Karta had contracted the debt in connection with
his new personal business and to clear all those debts he had executed the sale
deed. The debt in question was an antecedent debt so far as his sons were
concerned, and therefore, they were under a pious obligation to pay all those
debts. It was open to the father to execute a sale deed in respect of the shares
of his sons also unless it was shown that the debt was tainted with immorality or
D was for an Illegal purpose. The case of the sons was not that the debt was
contracted for an illegal or immoral purpose. The sale would therefore
be binding on the sons of the Karta. With regard to the sons of the Karta's
brother, the same is however not the position. In view of the factual position
that the fungi business was the individual or private business of the Karta it
could not be said that his brother had alienated the joint family property in the
capacity as father of his sons for discharging any antecedent debt incurred by
E him merely because he had also joined the Karla in executing the sale. The
share of the sons of the brother could not therefore have been alienated by the
Karta for discharging antecedent debts. [135 E-H] .
5. Ext. B-54, an inland letter dated 27th July, 1954 was written by the
Karla in Telugu to Veeraswami Naidu, and is the most important document
supporting the vendors. This letter has been relied upon by t.he trial
F Court but has been discarded by the High Court. If this letter is proved
to be genuine it gives a death blow to the case of the vendees. This
letterwhich bore postal stamps could not have been fabricated. The
observation of the High Court that it might have been written subsequently
is a conjecture. No such case was even set up by the veodees in the written
statemeut or iu the evidence. The High Court attached undue importance to
the fact that if Ext. B 54 reached the addressee on the 4th August, 1955 then
G Exts. B-20 and B-48 could not have been prepared on the 30th July, 1955. The
difficulty is solved if a reference is made to the last paragraph of the letter.
The addressee was informed that they were coming to meet D.W. 12 the next
day. There was, therefore nothing improbable in the preparation of these two
documents on 30th July, 1955. [123 B-C, 126 A, 125 H, 126 B-C]

H 6. The observation of the High Court that there was no necessity for the
Karla and his brother to bring into existence fictitious promissory notes in favour
of D.W. 3 and D.W. 12,as they could have easily mentioned the other undisputed
PRASAD V. V.G. MUDALIAR I I3

debts owed by them to support the recital of the consideration in the sale deed, A
also does not hold good because there is ample evidence on record to warrant
the conclusion that the promissory notes in favour of D.W. 3 and D.W. 12, were
fictitious. Most of the debts have neither been referred co in the deed of agree-
ment for sale nor in the sale deed and it was purposly done. If the aforesaid
circumstances had been taken into consideration the High Court could have
had no difficulty in accepting Ext. B 54 as genuine. [126 G-127 A]
B
In the instant case, the new business of /ungi started by the Karla ended
in a loss. There was pressure from the creditors for the discharge of the debts.
As a prudent man, he would have liked to save his property to the extent he
possibly could and pay off the various debts incurred by him. Curiously enough
the Karta and his brother sold away the entire landed property of about 47 acres,
leaving behind only an acre, and a house, owned by the joint family for a petty c
sum of Rs. 16,500. Out of the total consideration of Rs. 16,500 the vendees

- were asked to discharge the various debts. All the debts incurred by the Karta
were not shown in Ext. B-5 and Ext. B-4 the deed of agreement. [127 C-D]

7. The stipulation in the sale deed that the vendee pay off only the secured
debts and clear off the other ordinary debts at their leisure itself indicates that
there was no anxiety on the part of the vendors to clear off all the debts. It is n
also not clear why the vendors should adopt such an attitude. These circum-
stances speak for themselves. They indicate th~t the vendees persuaded the
Karta to execute a sale deed of almost his entire family property under the
pretext of assistance to him with the stipulation that they would re-convey the
property to the vendors after the pressure from the creditors was over. [I 28 C-E]

8(i) The legal position under the Hindu Law about the pious liability E
... of the sons to discharge the antecedent debts of the father is quite clear.
A natural guardian of a Hindu minor has power in the management of
his estate to mortgage or sell part thereof in case of necessity or for the
benefit of the estate. If the alienee does not prove any legal necessity or
that be does not made reasonable enquiries, the sale is invalid. But the father in
a joint Hindu Family may sell or mortgage the joint family property including
the sons' interest therein to discharge a debt contracted by him for his own F
personal benefit and such alienation binds the sons provided : (a) the debt was
antecedent to the alienation, and (b) it was not incurred for any immoral pur-
pose. (ii) "Antecedent" debt means antecedent in fact as well as in time. The
debt must be independent of and not part of the transactions impeached. The
debt may be a debt incurred m connection with a trade started by the father.
The father alone can alienate the sons' share in the case of joint family. The
privilege of alienating the whole of joint family property for payment of an ante- G
cedent debt is a privilege only of the father, grandfather and great grandfather
qua the son or grandson only. No other person has any such privilege.
[134 H-135 B, D-E)

Sidheshwar Mukherjee v. Bhubneshwar Prasad Narain Singh and Ors.
[1954] SCR 177 ; Brij Narain v. Mang/a Prasad and Ors. L.R. 51 I.A. 129. H
Shanmukam v. Nachu Ammal A.I.R. (1937) M&d. 140; Dudh N(lt/i v, Sat Nwat11
Ram A,I.R. (1966) All. ~IS, r~f~rre\! to,
l14 SUPREME COURT RF.PORTS [ 1982) 2 s.c.R.

A The validity of an alienation made to discharge an antecedent debt rests
upon the pious duty of the son to discharge his father's debt not tainted with
immorality. [135 CJ

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1102-1103
of 1970.
B
Appeals by certificate from the judgment and Decree
dated 6th November, 1968 of the Madras High Court in A. S.
Nos. 534 of 1961 and 165 of 1962.

T.S. Krishnamurthy Tyer, Gopal Subramaniam and Mrs. Gopala-
krishnan for the Appellants.
c
Vepa P. Sarathy, Naresh Sharma and Vineet Kumar for the
Respondents. -
The Judgment of the Court was delivered by
D MISRA J. The psesent appeals by certificate are directed
against the judgment dated 6th November, 1968 of the Madras
High Court.

The dispute between the parties centres around 48. 70 acres of
land, partly wet and partly dry in village Pichanur, Gudiyattam
E Taluk, North Arcot District and one house in Gudiyattam town.
Admittedly the said properties belonged to one Varadayya Chetty.
He had two sons, K. V. Purushotham and K. V. Sriramalu. K.V.
Purushotham in his turn had four sons while K.V. Sriramulu had
three sons. They constituted a joint Hindu family. The family
owned and possessed 48.70 acres of land and three houses. Vara-
F
dayya Chetty died about 30 years prior to the institution of the
suits giving rise to these appeals. At the time of his death his eldest
son K. V. Purushotham was the only adult male member, the other
son, K.V. Sriramulu being only 4-5 years old. Purushotham thus
came into the sole management of the cntrie family affairs and he
brought up his younger brother Sriramalu. Their ancestral family
G business (Kulachera) was that of tobacco and money lending.

It appears that immediately after the second world war Puru-
shotbam started a new business of fungi. In connection with his
new venture be borrowed money from others either on promissory
H
notes or on the security of the family properties. He, however, suffe-
red Joss in that business. When his creditors began to press for imme-
l>RASAt> v. V.G. MtJt>ALIAR (Misra, J.) 115

diate discharge of the debts, K. V. Purushotham and his brother A
K.V. Sriramalu on.their behalf and on behalf of other minors in
the family entered into an agreement on 7th July, 1955 with V.
Govindaswami Mudaliar and V. Nataraja Mudaliar, sons of Vadi·
nankuppam Venugopala Mudaliar. This agreement was evidenced
by a writing, Ext. B-4. Under the agreement K. V. Purushotham
and K.V. Sriramulu were to sell their entire property, except one B
acre of land, and a house, to Mudaliar brothers for a sum of
Rs. 14,000 to discharge their debts. They received a sum of
Rs. 500 by way of advance and the balance of Rs. 13,500 was to be
paid within two months. It was further stipulated that in case the
vendees defaulted they would Jose the advance money, on the other
hand if the vendors defaulted they would have to pay to the vendees c
a liquidated damage of Rs. 2000.

Pursuant to the aforesaid agreement, a sale deed was executed
on 22nd of August, 1955 marked Ext. B-5 for an enhanced conside-
ration of Rs. 16,500. The sale deed referred to various debts owed
by the vendors which were to be discharged by the vendees and the n
balance, if any, was to be paid to the vendors. The recital in the
sale deed indicates that Rs. 250 was paid in cash to the vendors at
the time of the cxecu ti on of the sale deed. The sale deed further
recites that the vendors have not shown the exact amount of debts
which the vendees have agreed to pay. The amounts specified there-
in are only approximate. The sale deed further authorised the ven- E
dees to discharge the mortgage debts mentioned in the sale deed in
the first instance, if they had no sufficient funds to clear off all the
debts at one time and clear off the ordinary debts later.

The validity of the aforesaid sale deed, Ext. B-5 dated 22nd F
August, 1955 and a mortgage deed Ext. B-49 in favour of A. M.
Vasudeva Mudaliar had been challenged by the sons of K.V. Puru-
shotham and K.V. Sriramalu respectively by two suits: Suit No. 107
of 1958 and Suit No. I 08 of l 958. There was yet another suit by
one of the creditors, M.V. Chinnappa Mudaliar for annulment of
the said sale. As mentioned earlier, the original sui: No.· 107 of G
1958 was filed by the four sons of Purushotham impleading Puru-
shotham and Sriramulu as defendants Nos. I and 2 and three minor
sons of Sriranrnlu as defendants Nos. 3 to 5 under the guardianship
of their mother; V. Govindaswami Mudaliar, V. Shanmugha Muda-
liar, and V. Nataraja Mudaliar, the three vendees as defendants H
Nos. 6 to 8 in suit No. 107 of 1958 and defendants Nos. 8 to 10 in
suit No. 108 of 1958; A.M. Vasudeva Mudaliar, defendant No. 9
j j6 SUPREME COURT REPORTS (1982] 2 s.c.tt.

A and the Official Receiver of the North Arcot District as defendant
No. IO.

Suit No. 108 of 1958 was filed by the three minor sons of
Sriramulu. The plaintiffs and other defendants of original suit
No. 107 of 1958 were impleaded as defendants in this suit. The
B relief claimed in these suits was for partition after setting aside the
sale deed dated 22nd of August, 1955, Ext. B-5 and the mortgage
deed Ext. B-40 in favour of A.M. Vasudevan Mudaliar. The alle-
gations in the plaint of the two suits are on the same pattern. It
will, therefore, suffice to refer to the allegations made in suit
No. 107 of 1958.
c It is alleged in the plaint that the ancestral property of the
family consisted of 48 acres and 70 cents of land and three houses
detailed in Schedules B and C to the plaint. The said land fell
in two blocks, one consisting of 43 acres, 21 cents and the other of
5 acres 49 cents. There were two wells in the first block and one
D well in"the second block. There were two pump-sets with electric
motors installed in the two wells in the first block at a cost of
Rs. 3000 each~ The net cultivation yield from the land in any
case would not be less than Rs. 6000 per year which was more
than sufficient for the maintence of the family leaving even some
surplus. The father of the plaintiffs started a new business of
E fungi which was not the business 'Kulachara' of the family. In
connection with the new venture he bad to borrow large sums of
money either on promissory notes or on the security of the afore-
said property. In course of the said business Purushotham sustained
...
a heavy loss. When the mortgagees and unsecured creditors started
pressing for immediate discharge of the debts, defendants 6 to 8,
F who happened to be friends of Purushotham, induced him to create
a nominal sale of the house and the entire land, except an acre, in
order to stave off the immediate pressure. Purushotbam
seemed to have fallen in with the idea and consequently executed
first an agreement to sell and then a registered sale deed dated 22nd
of August, 19 55 for a nominal consideration of Rs. 16,500 in res-
G pect of the entire land in Schedule B with electric pump sets, with
, the exception of one acre, and a house which is item No. I of
Schedule C. Defendants 6 to 8 represented that they would execute
a formal deed of reconveyance of the properties after the pres-
sure from creditors was staved off. The sale deed was not
H supported by consideration and even recited consideration
Rs. ) 6,500 was grossly inadequate and extremely low consi-
PRASAD v. V.G. MUDALIAR (Misra, J.) 117

dering the extent of land and the house and their market A
value. The entire joint family property was not worth less than
Rs. 35,000 and its annual yield was worth more than Rs. 6,000.
The house mentioned at item No. I of Schedule C was also worth
Rs. 5,000 though the consideration for the same in the sale deed
was only Rs. 2,000. Defendants 1 and 2 continued in possession
of the properties sold, for about a year when suddenly defendants B
Nos. 6 to 8 conceived the idea of defrauding the defendants l and
2 and by force and violence trespassed upon the lands and took
forcible and unlawful possession thereof along with the standing
i crops worth Rs. 6,000 Defendants 1 and 2 were, however, still in
possession and enjoyment of the house mentioned in item No. 1
of Schedule C. Defendants 6 to 8 were bound to deliver c
the possession of the land to the plaintiffs and defendants I to 5
together with the mesne profits from June 1956, the date of
- trespass.

It was further alleged that except the two mortgages men-
D
- tioned in the sale deed the other debts shown as consideration were
false and fictitious. Even the said mortgages were paid by defen·
dants 6 to 8 out of the standing crops. There was absolutely no
necessity for borrowing the large sums considering the large income
from the joint family properties. Even if the alleged debt due on
the promissory note executed by defendant No. l in favour of the
9th defendant was true, it was not binding on the plaintiffs to the E
extent of the cash consideration as it was not for necessity.
Defendant No. 2 joined the execution of sale deed and the mortgage
deed at the behest of the 1st defendant and on misrepresentations
made by defendants Nos. 6 to 8 and in fact he had not derived any
benefit from the borrowings. As M.V. Chinnappa Mudaliar had
filed a petition against Purushotham, being insolvency petition
F
No. 20 of 1955, and Purushotham was adjuged insolvent so the
Official Receiver was impleaded as a defendant in this case.

The third suit being suit No. 4 of 1960 was filed by M.V.
Chinnappa Mudaliar, a creditor of defendants K.V. Purushotham G
and K.V. Sriramulu against the vendees V. Govinda~wami Mudaliar
and his two brothers arrayed as defendants l to 3. He first filed an
insolvency petition in which Purushotham was adjudged as insol-
vent. The said creditor had approached the Official Receiver for
filing a suit for the annulment of the said sale but as Official H
Receiver demanded a lot of expenses he, therefore, sought "the per-
mission of the Insolvency Court to file suit No. 4 of 1960 himself
118 SUPREME COURT REPORTS [1982] 1 s.c.R.

A for a declaration that the sale deed dated 22nd of August, 1955
executed by Purushotham in favour of vendees was void or voidable ·
at the instance of the creditors of Purushotham and for annulment
of the same. ·According to him Purushotham had borrowed a sum of
Rs. 1000 from him and had executed a bond for that amount on 17th
September, 1947 carrying interest at 13 annas per cent per mensem.
B Barring some payments a snbstantial amount was still due from him
as principal and on account of interest in _the middle of 1955.
Purushotham, however, executed a sham, nominal and fradulent
sale deed dated 22nd August, 1955 in respect of almost all the
family properties in favour of the defendants Nos. 1 to 3 with an
intent to defeat and delay his creditors, including the plaintiff.
c It was also pleaded that property worth Rs. 50,000 was alienated
for a nominal price obviously for discharge of fictitious debts. So,
the plaintiff claimed a relief under section 53 of the Transfer of
Property Act.

The claim of the plaintiffs in all the three suits was resisted
by the transferees.· In substance their defence was that the aliena- ...
tion by Purushotham was for payment of antecedent debts which
were untainted by illegality or immorality; that the father under
the Hindu Jaw possesed a special power to alienate joint family
property including the shares of his sons for payment of his own
E debts not incurred for immoral or illegal purposes; that in ex~rcise
of that power he had sold all his interest and the interest of his
minor sons, that a registered agreement of sale was entered into
on 7th of July 1955 and the period of two months was provided
for the performance of the contract and the vendees had investigated
before entering into the transaction; that the transaction was normal,
F regular and bona fide one; that the vendees had in fact paid off
the full consideration applying it for discharge of antecendent debts
obtaining from several creditors vouchers for such due payment and
cancellation. A.M. Vasudevan Mudaliar who had been arrayed
as defendant No. 9 in suit No. 107 and as defendant No. 7 in
suit No. I 08 of 1958 resisted the claim of the plaintiffs in
G
those suits on the ground that the mortgage in his favour
was incurred for the discharge of antecede11t debts and
for the need of the Hindu family, which was binding upon the
members of the family. The plaintiffs in both the suits Nos. 107
and .108 of 1958, the sons of the vendors, were bound by the said
H
alienation.
PRASAD v. V.G. MUDALIAR (Misra, J,) 119

A
The pleadings of the parties gave rise to a number of issues.
Some of the issues were common in afl the three suits. On the
request of the parties all the three suits were jointly tried.

Before the trial commenced a joint memo was Ii led in original
suit No. 4 of 1960 whereby the parties agreed that the evidence in
original suit No. 4 of 1960 regarding lack of consideration for
the sale deed dated 22nd of August, 1955 and the value of the pro- ·
perties, be treated as evidence in original suit Nos. 107 and 108 of
1958. They also agreed that the evidence regarding the mortgage
deed dated 2nd of March 1952 be treated as common evidence for
original suit Nos. I 07 and I 08 of 1958 After this statement by the
counsel for the parties, the original issues framed in the three suits
c
- were recast and additional issues were also framed.

The Subordinate Judge came to the following conclusions in
suit No. 4 of 1960:
0
(I) At the time of execution of the sale deed. Ext. B-5,
the fourth defendant, that is Purushotham, owed some
creditors in whose favour he had executed Exts. A-3,
A-4, A-12, A-13 and the bond debts involved in
Exts. A-7 to A-11, but no provision had at all been
made for those creditors either in the agreement of
sale Exts. B. 4 dated 7th of July, 1955 or in Ext. B-5,
the sale deed dated 22nd of August, 1955.

(2) Ext. B-54, the letter written by Purushotham in favour
of Veerasami Naidu dated 27th of July. ! 955 a!ong-
-- with other oral evidence clearly establishes the inten-
tion of Purushotham to defeat and delay the claim of
F
some of the creditors in screening his property by a
nominal sale in favour of defendants 1 to 3.
-.
(3) The ingredients of section 53 (I) of the Transfer of
Property Act have been satisfied by the plaintiff in as
.. much. as impugned transfers have been made with
intent to defeat or delay the creditors of the trans-
feror. The Court, however, came to the conclusion
• that the suit was wrongly framed inasmuch as the
plaintiff did not seek any relief on behalf of or for the
benefit of all the creditors and, therefore, the Court
decreed the suit No. 4 of 19(;i0 as a~ainst <!efendants l
120 SUPREME COURT REPORTS (1982) 2 S.C.R
A to 3, that is, alienees annulling the sale transaction
dated 22nd August, 1955 as fraudulant preference
under section 54 of the Provincial Insolvency Act,
insofar as the insolvent's share was concerned.

8 His conclusions in suit Nos. 107 and 108 of 1958 were as
follows:

(I) The value of the land and house including the pump
sets, wells etc. comprised in Ext. B·5 could have been
in August 1955 worth anywhere between Rs. 35,000 to
c Rs. 50,000, but the same had been sold at a grossly
low and inadequate price of Rs. 16,500.

(2) Purushotham and Sriramulu with the help of
-
Shri Rangaswami, who was theic friend, approached
the vendees for help and on their suggestion they
D agreed to execute a no min al sale of all their properties
with an understanding for reconveyance after ten years
on payment of the sums advanced by them and that
in that connection they had thought of executing the
two bogus bonds, one in favour of Veeraswami Naidu,
DW 12, and another in favour of Deivasigamani
E Mudaliar, DW 3 and certain other documents to
make the sale probable.

(3) The sale dated 22nd August, 1955 is true and it is
supported by consideration but only partly. It is,

F
however, liable to be set aside wholly as an imprudent
transaction. -
(4) The mortgage deed dated 2nd of March 1952 is true
and binding only so far as shares of K.V. Purushotham
and Sriramulu are concerned and to the extent of
Rs. 2000 so far as the plaintiffs in original suit
G No. 107 of 1958 are concerned.

(5) The alienees under the sale transaction dated 2211d of
August 1955 are not entitled to any equities in this
suit. But the alinee under Ext. B. 49 would be entitled
H to have his two items of house aliotted to the share of
K.V. Purushotham and K.V. Sriramulu to work out
his equities but this will be easily done in the final
PRASAD v. V.G. MUDALIAR (Misra. J.) 121

decree proceedings in original suit No. 107 of 1958 A
and !08 of 1958.

(6} The plaintiffs would be entitled to past profits from the
alienees of the sale transaction dated 22nd of August,
1955 from the year 1956-57 as it is in evidence that
they entered possession in that year. B
On these findings the Subordinate Judge passed a preliminary
decree for partition and division of their respective shares in suit
Nos. 107 of 1958 and 108 of 1958 which was 2/5th and 3/8th
respectively in both the suits after setting aside the sale transac-
tion dated 22nd of August, 1955 and directing the alienees to work
out their remedies outside the scope of these suits and declaring
c
that the alienation dated 2nd March, 1952 was binding only on the
shares of K.V. Purushotham and K.V. Sriramulu and to the extent
- of Rs. 2000. The plaintiffs were held entitled to a decree for past
profits from 1556-57 as against the a!ienees of the sale transaction
dated 22nd August, 1955, the quantum to be determined in a sepa- D
- rate enquiry in the final decree proceedings as was agreed to by
the parties under Order 20, rule 12 C.P.C. The court declined to
give any relief to the alienees even in respect of the amount actually
paid by them to discharge some of the debts incurred by
Purushotham on the ground that the transaction has been vitiated
by fraud. E
The alienees-defcndants feeling aggrieved by the judgment and
decree of the Subordinate Judge preferred appeals in all the three
suits. The mortgagee Vasudevan Mudaliar, however, submitted to
the judgment and decree and did not prefer any appeal presumably
because he could realise the amont due to him by virtue of the F
decree granted to him. The High Court was, therefore, concerned
---- only with the validity of the sale deed Ext. B-5 in favour of the
appellants.

The High Court reversed the findings of the trial court in
suits Nos. 107 and 108 of 1958 and set aside the decree passed by G
the Subordinate Judge but confirmed the finding and decree in suit
No. 4 of 1960. The High Court came to the conclusion that the
• purchase of the suit land under Ext. B-5 was for a reasonable price
and the consideration of Rs. 16,500 mentioned in Ext. B-5 was
not a grossly low price. The lungi business started by Purushotham H
• was new a venture of Purushotham and not his family business. His
father had only a tobacco and money-lending business. The genuine
122 SUPREME COURT REPORTS (1982] 2 S.C.R.

A debts mentioned in Ext. B-5 were antecedent debts from the point
of view of the plaintiffs in original suit No. 107 of 1958. There-
fore, they are binding on them. As the debts evidenced by
Ext. B- I 3 and B-14 were genuine debts the alienation, Ext. B-5, is
clearly binding on the plaintiffs in original suit No. 107 of 1958
as the sale deed was executed by their father in discharge of antece-
B dent debts. The alienation under Ext. B-5 can be supported not
only against the plaintiffs in original suit No. 107 of 1958 but also
against the plaintiffs in original suit No. 108 of 1958 as it was made
in discharge of antecedent debts of their respective fathers.

On these findings the High Court allowed the appeals filed by
c the alienees in suit Nos. 107 and 108 of 1955 but dismissed the
appeal filed in suit No. 4 of 1960. The plaintiffs have now come in
appeal to challenge the judgment of the High Court.

D
The contention raised on behalf of the appellants is that the
High Court has omitted to take into consideration various circum-
stances which had been taken into consideration by the trial court
-
and as such the findings of the High Court on material issues are
vitiated. The High Court further omitted to consider whether the
impugned sale was an imprudent transaction, if not fictitious. The
counsel for the respondents, on the other hand has contended that
the findings recorded ,by the .High. Court are pure findings of fact
based on appraisal of evidence and this Court cannot reverse the
findings recorded by the last court of facts. We have to consider
the findings of the High Court in the light of the contentions raised
by the parties. ...
The question for consideration in these appeals is about the
F genuineness of the sale deed Ext. B·5 dated 22nd of August, 1955
executed by Purushotham and Sriramulu in favour of respondents
I to 3. As stated earlier the sale deed was challenged by the
plaintiffS on grounds : (a) that it was executed only nominally for
a collateral purpose and with a view to stave off credit'1rs with the
express understanding that the properties sold would be re-conveyed
G to the vendors after the pressure of the creditors had sub-dued; (b)
that even the recited consideration in the impugned sale deed was
grossly inadequate; (c) that the debts under the promissory notes
Ext. B-13 in favour of Veeraswami Naidu and Ext. B-14 in favour
of Deivasigamani Mudaliar were fictitious.
H
The burden squarely Jay on the vendees to prove that the .
impugned sale deed was valid and binding on the plaintiffs and

-·.
PRASAD v. V.G. MUDALIAR (Misra. J.) 123

their respective shares. To discharge this burden the vendees have A'
produced both oral and documentary evidence. The vendors
have also produced both oral and documentary evidence in support
of their case .
•
Before dealing with the oral evidence of the parties in detail,
it is pertinent to refer to Ext. B-54 which is the most important B
document supporting the vendors. This is an inland letter dated
~7th of July, 1955 written by K.V. Purushotham in Telugu to
Veeraswami Naidu. If this letter is proved, to be genuine it will
give a death blow to the case of the vendees. This letter has been
relied upon by the trial court but has been discarded by the High
Court. As this letter is a revealing one it will be appropriate to c
quote the letter in extenso.
-- "Gudiyattam,
27.7.55

-· Letter written by Gudiyattam K.V. Purushotham with
salutations to-elder brother Sri B. Veeraswami Naidu of
D

Mathangal village. Here all are keeping good health with
your blessings. Please write to me. )our and your children's
welfare. 1
E
In respect of the debts due to the creditors by me
here, I and your son-in-law T.G. Rangaswami Naidu
went to see Vaithana Kuppam Venugopala Mudali and
his sons V. Govindaswami Mudali and brothers and
had a talk with them in respect of the debts due by me.
· They said to us that I should execute a sale deed in res-
F
pect of my properties in their favour and that after the
creditors demands (troubles) subside the amount that they
would be giving us shall be repaid within a period of
10 years and that on such repayment they would reconvey
property conveyed in their favour. As all of us have
desired I and my younger brother entered into an agree- G
ment on 7.7.1955 agreeing to execute a deed of sale in
pursu"ance of. the talk we had ..

Sale deed remai~s to be executed. In this connection
(regard) I and my younger _bro'ther both have to create ff
·some nominal bonds fixing up to some dates and theri set
up as though these bonds were cancelled 1 ci"n payments
124 SUPREME COURT REPORTS (1982] 2 S.C.R.

A being made by those persons and that those items might be
recited in the sale deed to be execut1~d. For resorting to ...
this, 'ne all decided and fixed you up as one such (person)
in whose favour bonds have to be drawn up to a fixed
date. If such bonds are drawn up in favour of respectable
persons like you and if all of us joi11 together, then the
B other creditors cannot do anything. As you are a trusted
person these could be done in your favour as stated. They
have agreed to give us great help in this matter. Further
he is a very good friend of us. If the amount to which
they are entitled to, is paid back within IO years, without
fail, then they will reconvey by way of deed of sale in
c our favour. They will not fail in their words. All of us
have decided that a bond should be: executed in your
favour nominally fixing up to a particular date for a sum
of Rs. 2500. Thereafter on some other date you have to
-
make an endorsement of payment on the bond and return
the bond after cancelling the same. Further I and my
D younger brother have executed a nominal bond for
Rs. 1000 on 15.12.1954 in favour of C.R. Deivasigamani
too i.e. his junior paternal uncle viz.,. V. Govindaswami
Mudali's mother's sister's husband. Your son-in.Jaw
T.G. Rangaswami Naidu has attested as a witness in
that.
E
...
In respect of the bond in your favour, you have to
send a notice to us. V. Govindaswami Mudali, son of
Venugopal Mudali told me that such a notice is essential
that should be on record to strengthen the sale deed.
F Further, we are also told that you should write a letter
to your son-in-law T.G. Rangaswami Naidu asking him
to make demands regarding the amount clue to you. The
main reason for doing all these is to stop the trouble
given by the other creditors to whom I owe.
G
Therefore, with a view to meet you i11 person, discuss
and arrange regarding the aforesaid matter, I and your
son-in-Jaw T.G. Rangaswami Naidu am going over to
your village tomorrow. You will have: no difficulty in
H this matter. Therefore, I request that you and your
senior son·in-law Raghavalu Naidu to remain in the house.
We will inform you the rest of the ma,tters in person.
PRASAD v. V.G. MUDALIAR (Misra, J.) 125
•
We request you to show faith or kindness towards A
this poor family.

Thus with salutations. (in Telugu)

Sd/- K.V. Purushotham."
8
The reasons which impelled the High Court to discard this
letter are as follows : (I) the author of this letter K.V. Purushotham
did not appear in the witness box; (2) the document does not come
from a proper custody; (3) there is no reason why the letter should
have been sent from Gudiyattam to Manthangal village when one
could reach the latter village from Gudiyattam within a short time c
by a bus or other conveyance; (4J the letter was posted on 28th
July, 1955 at 5 p.m. and reached its destination on 4th August 1955
as it appears to have detained at Ranipet in the interval then how
did they come to prepare Ext. B-20 and Ext. B-48 even on 30th
July 1955; (5) in Ext. B-54 Purushotham had expressed that he
would be meeting D.W. 12, Veeraswami Naidu, on the very next D
day and thus there was no real necessity to write the letter Ext. B-54;
(6) if Purushotham conspired with the son-in-law of D.W. 12,
Veeraswami Naidu to bring into existence fictitious promissory
notes, it is unlikely that they would announce it in the letter
Ext. B-54 when they were not sure of the attitude of D.W. 12,
Veeraswami Naidu, unless they wanted to create evidence for the
E
purpose of the case; (7) there was no necessity for Purushotham
and Sriramulu to bring into existence fictitious promissory notes in
favour of D.W. 3, Deivasigamani and D.W. 12, Veeraswami Naidu,
as they could have easily mentioned the other undisputed debts
owed by them to support the recitals of consideration in the sale
deed. The counsel for the respondents has reiterated the same
F
reasons for discarding Ext. B-54.

The first ground which weighed with the High Court for dis-
carding the letter Ext. B-54 is that the author of this letter K.V.
Purushotham did not appear in the witness box and the document G
does not come to court from a proper custody. No such objection
was raised no behalf of the vendees in the trial court regarding the
admissibility of the letter. The evidence of D.W. 13 and D.W. 18
have clearly proved the handwriting of K.V. Purushotham in
Ext. B-54. The observation of the High Court that the letter might H
have been written subsequently is conjectural one. No such case
was even set up by the vendees in the written statement or in the
126 SUPREME COURT REPORTS [1982] I R.C.S.
•
A evidenee, Exhibit B-54 is an inland letter bearing the postal stamps
and it could not have been fabricated.

A capital has been made out of the delayed delivery of the
letter on 4th August, 1955 The letter was posted on 28th of July, ,,
1955 at 5 p.m. and it reached its destination on 4th of August, 1955.
8 It appears to have been detained at Ranipet in the interval. The
High Court has attached undue importance to the fact that if
Ext. B. 54 reached the addressee on 4th of August, 1955 then how
did they come to prepare Exts. B-20 and B ·48 even on the 30th of
July, 1955. The difficulty is solved if we keep in mind the fact that
in the last paragraph of the letter the addressee was informed that
c they were all coming to meet him (D.W. 12) at his place the next
day. If in accordance with the recital of the letter Purushotham
had reached the next day, the 29th of July, 1955, there was nothing
improbable in the preparation of the two documents on 30th
July, 1955.

D There is a slight inconsistency in the evidence of D W. 12
when he says that only on the receipt of Ext. B-54 other documents
were prepared. But the evidence of D.W. 12, which otherwise
appears to be natural, cannot be discarded merely on this slight
inconsistency.,

E · The other reason which has appealed to the High Court for
believing Ext. B-54 is that if Purushotham was to meet Veeraswami
Naidu the very next day, then there was no real necessity to write the
letter Ext. B-54. It could not be expected that the letter would be
so unduly delayed and if Purushotham has taken precaution by
writing a letter and also by going to his place it cannot detract from
F the value of Ext. B-54.

The observation of the High Court that there was no n!;!
sity for Purushotham and Sriramulu to bring into existence ficti-
tious promissory notes in favour of D. W. 3, Devasigamani and
D.W. 12, Veeraswami Naidu as they could have eaiily mentioned the'
G other undisputed debts owed by them to support the recital of the
consideration in the sale deed, also does not hold good in as much as
there is ample evidence on the record to warrant the conclu>ion that
the promissory·_ notes' in· favour df D.W. 3, Devasigamani and·
D.'W. 12, Veeraswami Naidu were fictitious. Most of the debts
H have ·riei'ther been referred to 'in the deed of agreement for sale nor
in tli'e ~ale deed and it was purposely.done. · '
: .;· • : : f
PRASAD v. V.G. MUDALJAR (Jfisra, J.) 127

A
If the High Court had taken into con>ideration the afor~>aid
tell-tale circumstances there would have been no difficulty in accept-
ing Ext. B-54 as genuine.

The circumstances which should have been taken into consi-
deration by the High Court b~fore reversing the findings recorded B
by the trial court are as follows.

In connection with the lungi business started by K.V. Puru-
shotham he had to borrow .money from various creditors. When
the new business of lungi ended in loss there wa• pressure from the
creditors for the discharge of the debts. K. V. Purushotham was c
thus in a tight corner. As a prudent man, he would have liked to
save his property to the extent he possibly could and pay off the
various debts incurred by him. Curiously enough Purushotham and
his brother. Srirarnulu sold away the entire landed property of
about 47 acres and odd, leaving behind only an acre, and a house,
owned by the joint family for a paltry sum of Rs. 16,500. ·Out of
0
the total consideration of Rs. 16,500 the vendees were.asked to
discharge the various debts mentioned in Ext. B-5, the sale deed.
On an examination of the sale deed, Ext. B-5 as well as the deed of
agreement Ext. B-4, it is a clear that all the debts incurred by
Purushotham were not shown in those deeds. Ext. B-4 detailed
only two mortgage debts while Ext. B.5 speci tied five items of debts. ·
Admittedly there were other debts also ·incurred by K. V. Puriisho-
tham. It passes one's comprehension why would K.V. Purushotham
and his brother ·Sriramulu sell away the entire landed property of
47 acres leaving ·behind only one acre, and a house, without makirig
a· provision for the discharge of alt the. outstanding debts. Not
F
only that, there was a stipulation in the sale deed Ext. B-5 that the
vendees may first pay debts under the mortgage if the vendees had
no money to discharge all the debts at one and the same time and
to clear off the ordinary dehts at a later date. ·

What was the earthly reason for executing the sale deed of
almost all the. property owned by the family? ff Purushotham
wanted to· save .his reputation by paying off all the creditors then
there should have been provision made for discharse of all the
debts and atleast. they should have been specified either in the
aveement to sell or in the sale deed, Ext. B-5. Admittedly there H
were other "debts besides the debts specified in the sale deed,
Ext. B-5 .. K.V. Purushotham owed to other creditors in whose
128 SUPREME COURT REPORTS [1982] 2 S.C.R.

A favour he had executed promissory notes Ext. A-3, A-4, A-12 and
A-13, and bond debts involved in Exts. A-7 to A-11 but these
debts have not been shown either in Ext. B·4 or Ext. B-5 specially
when the debts were to be discharg,ed by the vendees under the
terms of the sale deed as part of the consideration. If almost the
entire property of the joint family was to be sold for the discharge
B of his debts, and yet a substantial part of lhe debt remains undis-
charged, there was no positive gain to the vendors in disposing of
almost the entire property of the joint family.

The stipulatation in the sale deed that the vendees might pay
off only the secured debts and clear off the other ordinary debts at
c their leisure itself indicates that there was no anxiety on the part
of the vendors to clear off all the debts. It does not stand to
reason why should the vendors adopt such an attitude. These
circumstances speak for themselves.

If we consider Ext. B-54 in the light of these circumstances,
D the letter appears to be a sequel to what has been agreed upon bet-
ween K.V. Purushotham and the vendees or their father. Th~
vendees persuaded Purushotham to execute a sale deed of almost
his entire family property under the pretext of assistance to him
with the stipulation that they would re·convey the property to the
vendors after the pressure from the creditors was over. This can
E be the only reason why the vendors would agree to dispose of the
entire joint family property for a paltry consideration of Rs. 16,500
out of which only Rs. 500 by way of advance and Rs. 250 at the
time of execution of the sale went to the vendors according to the
recital in the sale deed itself. The balance of the sale consideration
is alleged to have been used by the vendees for paying off some of
F the creditors. The attempt on behalf of the vendees has been to
show that they persuaded the creditors dther to forgo the interest
or to reduce the principal amount and thus they had cleared off
·--
the dues of the various creditors. In poof of this they tried to file
the receipts and vouchers from the creditors most of which have
G been attested by the vendees' own kith and kin. Some of the
documents which have been attested by these witnesses, have been
belied by D.W. 12 at least in respect of Ext. B-13. He clearly
admitted that Purushotham never borrowed any amount from him
nor did be pay any amount towards any :loan to him. He has given
H the full account of how Govindaswami Mudaliar and some other
persons came to the mango thope of his son-in-law and met him
there. They asked him to sign the endorsement of discharge in
PRASAD v. V.G. MUDALIAR (Misra, J.) 129

Ext. B-13. At first he protested and refused but on the assurance A
of other persons who were there he had to sign the document on
their persuasion on the ground that they were setting up these
documents in connection with a sale. The same position has been
admitted by even Rangaswami Naidu, D.W, 18.

It is true that purushotham, the author of the letter himself B
has not come to the witness box but the letter has been proved by
the addressee himself, D.W. 12, Veeraswami Naidu. He also
identified Exts. B-48 and B-48 A, the two cards containing his
signatures, one addressed to K.V. Purushotham and the other to
his brother, K.V. Sriramulu. But he admitted that he had signed
those postcards without knowing their contents. This gives a clue
c
how the vendees have been out to get attestations of the endorse-
ments of discharge from creditors in respect of got up documents. The
High Court has attached undue importance to the fact that Ext. B-54
has not come to the Court from proper custody, that is, it should
have come to the court through Veeraswami Naidu but instead it
D
was produced by his son-in-law, D.W. 18. Keeping in view the
relationship between Veeraswami Naidu and his son-in-law, the
production of the letter by his son-in-law cannot be said to be from
an improper custody. His two sons-in-law have also appeared as
witnesses as D. W. 13 and D.W. 18. D.W. 13, Rajavelu, deposed
that on the day Ext. B-54 was received by D.W. 12 he was
E
present. According to him on that day Govindaswami
Mudaliar and Purushotham came to their place and Purushotham
informed Veeraswami, his father-in-law that as a support for a sale
deed they had got up a bond in his favour. He dittoes what has
been said by'Veeraswami Naidu. The other son-in-law, Rangaswami

- Naidu, D.W. 18, also appeared as witness. He owns land adjacent
to the suit land. He also deposed that the bond debt mentioned
in Ext. B-5 in favour of of D.W. 12 and the bond debt in favour
of D.W. 3, Deivasigamani were got up ones. He also identified
F

Ext. B-54 as a letter written by Purushotham to his father-in-law,
·-..., Veeraswami Naidu.
G
The various other reasons given by the High Court for
recording Ext. B-54 are only flimsy and the circumstances enumera-
ted above make the letter Ext. B-54 a plausible and natural letter.
An adverse inference could have been drawn for non-appearance
of Purushotham but the other evidence in the circumstances in our H
opinion warrant the conclusions drawn by the trial court and we
choo~e to accept the findings of the trial court.

-~
130 SUPREME COURT REPORTS [1982] 2 s.c.tl.

This leads us to the other oral and documentary evidence.

The vendees have produced seven witnesses besides one of
them as D.W. I. Govindaswami Mudaliar, D.W. l, has substan-
tiated the case set up by the vendees in their written statement. He,
however, for the first time deposed that the family business of the
vendors has been weaving and fungi, although this was not their
case even in the written statement. He deposed that after the sale
the vendees took possessions of the land and the house and later on
leased out the land to Deivasigamani vide Ext. B-37, on an annual
rent of Rs. 1400 and the house on a monthly rent of Rs. 12 vide
Ext. B-41 and that from the time of purchase the vendees have
c been paying the kists and taxes for the land and the house.

The other witnesses produced by the vendees are Ratna
Mudaliar, D.W. 2. Deivasigamani Mudaliar, D.W. 3, G. Rajan
-
D.W. 4, Govindappa Mudaliar, D.W. 5, Vasudevan Mudaliar,
D D.W. 6, Punyakoti Chettiar, D.W. 7 and V.C. Manivannan, D.W. 8.
Ratna Mudaliar D.W. 2, lives only three houses away from the
house of Venugopal Mudaliar. He had attested Ext. B-4 and
Ext. B-5 and also the endorsement of d:ischarge in Exts. B-9, B-14,
B-15 and B-17. He had also attested the endorsement in Ext. B·37
and Ext. B-41. It was suggested to him that his signatures had
E been taken on the documents he had attested at a later date. He
denied this suggestion. He could not, however, describe the cir-
cumstances under which the endorsement to the discharge in
Ext. B-9 come to be written. He was so intimate with the vendees
that he was asked to attest so many documents but he evaded to

F
reply the question whether Deivasigamani was employed in the
shop of Govindas'wami Mudaliar when Deivasigamai1i himself has
admitted that he was in the service of D. W. I. -
Deivasigamani Mudaliar, D.W. 3, has also attested Ext. B-5
and the endorsement of di~charge in Ext. B-9 and Ext. B 13. He
G is also an attestator of the endorsement of discharge in Ext. B-1 2
He has admitted that he was related to D.W. 1, the vendee, and
also that he was in the service of Govindaswami .Mudaliar five years
back as his Gumastha. He also admits that he had taken certain
lands on lease from the vendees. He appears to have been present
on each and every crucial occasion for attesting the documents. He
being a close relation and also a servant of defend1111t No. 11 he is
boµnd to \!<;ho the voic~ of his ml\ster,
PRASAD v. V.G. MUDALIAR (Misra, i.) i3i
G. Rajan, D.W. 4, attested the endorsement of discharge in A
Ext. B-13, which was a promissory note executed in favour of
Veeraswami Naidu. He admitted in cross-exemination that he used
to call on D. W. 1 off and on and he happens to be his friend.
His evidence also gives the impression that he has come to oblige
• D.W. 1.
B
Govindappa Mudaliar, D. W. 5, bas attested Ex ts. B-4 and
B-5 and the endorsement of discharge of a bond Ext. B-9 to
Sambayya Chetty. He admitted that he was a regular visitor to
the house of D.W. 1. He used to go there to read newspaeprs.
He is also at the house of D. W. I on crucial occasions reading
newspapers. c
Vasudevan Mudaliar, D.W. 6, has deposed that K.V. Puru-
shotham and K.V. Sriramulu had borrowed money from him in
1952 and they had mortgaged a house and a vacant site under
Ext. B 49. Exhibit B·50 was a prior promissory note executed by 0
K.V. Purushotham. In renewal of that bond and for a further
advance of Rs. 2000 Ext. B-49 was executed for Rs. 4000. He
in his cross-examination that there were other big money lenders
viz., M.A. Govindaraju Chettiar, Managing Director of Rajeshwari
Mills, Gudiyattam; Motiyappa Mudaliar was also equally well-to-do
man and had got money lending business; Rajupatti Rajagopal E
Naidu and others. But K.V. Purushotham had not borrowed any
money from any of those persons. He also admitted in the cross-
examination that the value of the land within the radius of five
miles of Gudiyattam had risen in the course of five or six years.
He further deposed that his first cousin Vasudeva Muda\iar had
- purchased six acres for Rs. 24,000 within two years. He did not
deny the suggestion that the transaction might be four years back.
F
The statement was made on 8th of August, 1961 and about four
years back would take ns to 1956-57.

Punyakoti Chettiar, D.W. 7 deposed that Purusbotham and
his brother Sriramulu had borrowed Rs. 2500 from him and
G
executed a bond Ext. B-12. They had also executed Ext. B-16 for
Rs. 200. He further deposed that at the time of discharge of
Exts. B-12 and B-16 three persons had come to his place. They
were Raju Jaicker. E.A. Ponnusami Mudaliar and Venugopal
Mudaliar. But in cross-examination he positively admitted that H
neither Raju ·Mudaliar nor Devasigamani were present at the time
of discharge and attested the endorsement in Ext. B-12. In the
132 stJt>R.ilME COURT IU!POR'i'S (1982) 2 s.c.a.

endorsement of discharge, however, one Raju Naidu had attested.
He, however, admitted in cross-examination that Rangasami Naidu "'-·
and Ponnusami Mudaliar alone were present at the time of discharge
of Ext. B· 12 but neither Raju Mudaliar nor Deivasigamani Mudaliar,
who have atrested Ext. B· 12 were presimt at the time of dischage.
•
B V.C. Manivannan, D.W. 8, is: the Secretary of the Land
Mortgage Bank, Vellore. He speaks of the circumstances under
which the mortgage in favour of his bank was discharged.
According to him Venugopal Mudaliar, the father of Govindaswami
Mudaliar, come to the bank at the time of the discharge. He
enquired whether the penal interest could be given up. He repre-
c sented that remission, if any, made would enure to the benefit of
Purushotham when he gets resale. He also admitted that the valua-
tion of the property was that of the pre-war period and after the
the war prices had risen three to four times.

A scrutiny of the evidence produced on behalf of the vendees
D
reveals that the witnesses are intereste:d in the vendees and they
are out to oblige them. In some cases it is even doubtful whether
the attesting witnesses were persent at the time of attestation. The
possibility of obtaining their signature at a later date cannot be
ruled out.
E As against the evidence of the alienees, the evidence supporting
the vendors proves that the properties included in the sale deed
Ex. B-5 were worth somewhere between Rs. 40,000 to Rs. 50,000.
The village Munsif and Karnam of P'ichanur were examined as
D.W. 10 and D.W. 17 respectively. Acc:ording to D.W. 10 the land
belonging to the vendors included in the sale deed has a total area
F
of about 46 to 47 acres. They ar1~ situated in two blocks,
one block consisting of 42 acres and the other block con-
sisting of the balance. Two electric pumps were existing in the
block of 42 acres. He himself owns land adjacent to the suit land
owning about 40 acres. According to him, 20 acres out of 42 acres'
block were fit for wet cultivation viz., 1rabi, paddy, plantain and
G
other wet crops could be raised, while in the dry lands dry crops
like red gram, groundnut, horse gram de. could be grown. He
further deposed that in 1955-56 the 20 acres in which wet crops
could be raised was worth Rs. 1500 per acre while the land in which
dry crops could be raised was worth Rs. 300 to Rs. 400 per acre.
H
According to him it would cost Rs. 2500 or more to construct each
well and Rs. 1000 or so to construct the pumping set shed. There

/
i>RASAb v. V.G. MUDALIAR (Misra, J.) 1.33
A
were about 300 and odd palmyrah trees each of which would fetch
Rs. 5 or so. Besides there were tamarind and banian trees. One
tamarind tree would fetch about Rs. 250 and are banian tree would
fetch about Rs. 100.

He further deposed that for about a year after the sale the B
vendors alone continued to be in possession and thereafter the
vendees took forcible possession which resulted in a criminal com-
plaint by K.V. Purushotham. This witness is a Village Munslf and
there is no reason to doubt his veracity. He has got his own land
near the land in suit.
c
- The evidence of D.W. 17 is also to the same effect. He is a
fairly aged person and Karnam of Pichanur for the past 40 years.
The Trial Court has observed in its judgment that it was very much
impressed by the demeanour of this witness which impressed the
court as a person speaking the truth. He substantially supported
the evidence of D. W. 10. Kupayya Naidu, D. W. 11 is the lessee of D
defendants I to 3. He also supports the evidence of D.W. 10 and
D.W. 17 with regard to the valuation of the property.

D.W. 14 Channgayya Naidu, is !he president of the village
Panchayat board. He is also an adjacent owner. He had purchased
land admeasuring two acres and odd in 1958 for Rs. 4000, Ext. 55 E
being the registration copy of the sale deed. He also speaks of
some purchase of 3 acres and odd adjacent land in the name of his
undivided brother vide Ext. B-56 in 1960 for Rs. 9000. He is very
positive in saying that the land of the vendors could be valued at

- Rs. 50,000 in 1955.

T.L. Narayanasami Chowdri D.W. 15 is the Director of
Gudiyattam Taluk Land Mortgage Bank. He stated that he had
F

purchased 25 to 30 acres of dry land for a sum of Rs. 56,500 under
Ext. B-57 in the year 196 in the name of his undivided brother.
Under another sale deed Ext. B-58 dated 19th of March 1958,
13 acres and odd were purchased by them for Rs. 26,000. The land G
purchased under Ext. B-57 was situated only at a distance of one
furlong from the suit land and was similar to the suit land.

Anjaneyalu Naidu, D.W. 16, also owns land adjacent to
the land owned by the vendors. He also gave evidence with refe- H
rence to Exts. B-59, B-60 and B-61. Under Ext. B-59 dated 2nd
June, 1953 he had purchased 2.77 acres for Rs. 2500 under Ext. B-60
i34 sui>REMil cotiRi' REPoRTS !t982j 2 s.c.R.
A dated 14th February, 1957 he had purchased 2.27 acres for Rs. 3,500
and under Ext. B-61 dated 22nd June, 1960 he had purchased 3.27
acres for Rs. 7,000. All these lands according to him were punja
(dry) lands similar to the lands owned by the vendors. He further
deposed that in the year 1952-53 or so the fertile part of the dis-
puted land could fetch Rs. 1,500 to Rs. 2,000 while the punja (dry)
B lands could fetch Rs. 750 to Rs. lOOO per acre.

From the aforesaid evidence it can easily be concluded that
the land comprised in Ext. B-5 was fertile land capable of giving a
net return of not less than Rs. 2000 to Rs. 2500 per year. In this
state of the evidence, we agree with the conclusion drawn by the
Trial Court that the property in dispute was worth Rs. 40,000 to
Rs. 50,000 but it was sold only for Rs. 16,500 which is an inordina-
tely inadequate consideration.

From the evidence discussed above, both oral and documentary
-
and circumstantial, we in agreement with the trial court hold that
D the sale deed dated 22nd of August, 1955 is true and it is supported
by consideration but only in part and that even the recited consi-
deration in the sale deed is thoroughly inadequate; that the sale
deed was executed only nominally for a collateral purpose and with
a view to stave off creditors with the express understanding that the
properties sold would be reconveyed to the vendors after the pres·
~· sure of the creditors had subdued; that the debts under the promis-
sory notes Ext. B-13 in favour of Veeraswami Naidu and Ext. B-14
in favour of Deivasigamani Mudaliar were fictitious.

The contention of the counsel for the respondents that finding

F
of fact cannot be interfered with by th1~ Court has no force as the
finding is being reversed on the ground that material circumstances
have been ignored by the High Court. -
In view of the finding arrived at there is no question of
giving any equities to the vendees even if some of the amounts paid
by the vendees to some of the creditors of Purushotham were
G genuine. If the transaction of sale is itself vitiated for the reasons
given above, no relief in equity could be granted to the vendees.

Now the question crops up about the pious liability of the
sons to discharge the antecedent dobts of the father. The legal
H position under the Hindu law is quite clear. A natural guardian of
a Hindu minor has power in the management of his estate to mort-
gage or sell any part thereof in case of necessity or for the benefit
PRASAD v. V.G. MUDALIAR (Misra, J.) 135

of the estate. If the alienee does not prove any legal necessity
A
or that he does not make reasonable enquiries, the sale is invalid.

But the father in a joint Hindu family may sell or mortgage
the joint family property including the sons' interest therein to
discharge a debt contracted by him for his own personal benefit
and such alienation binds the sons provided (a) the debt was B
antecedent to the alieni.tion, and (b) it was not incurred
for an immoral purpose. The validity of an alienation made to
discharge an antecedent debt rests upon the pious duty of the
son to discharge his father's debt not tainted with immora-
lity.
c
- "Antecedent debt" means antecedent in fact as well as in
time, that is to say, that the debt must be truly independent of and
not part of the transactions impeached. The debt may be a debt
incurred in connection with a trade started by the father. The
facher alone can alienate the sons' share in the case of a joint
family. The privilege of alienating the whole of the joint family 0
property for payment of an antecedent debt is the privillege only of
the father, grandfather and great-grandfather qun the son or
grandson only. No other person has any such privilege. KV. Puru-
shotham had contracted the debt in connection with his new per-
sonal business and to clear all those debts he had executed the
impugned sale deed. Obviously, therefore, the debt in question was
antecedent debt so far as his sons were concerned and, therefore,
they were under a pious obligation to pay off these debts. It was
open to the father to execute a sale deed in respect of the shares of
his sons also unless it was shown that the debt was tainted with
immorality or was for an illegal purpose. It is not the case of
the sons of Purmhotham tbat the debt was contracted for an illegal
F
or immoral purpose. Obviously the sale would be binding on the
sons of Purushotham. But the same is not the position with regard
to the sons of his brother, K. V. Sriramulu who were the plaintiffs
in suit No. 108 of 1958. It has been found as a fact that fungi
business was the individul or private business of Purushotha01 In
G
view of the factual position it could not be said that Sriramulu had
alienated the joint family property in the capacity as a father of his
sons for discharging any antecedent debt incurred by him merely
because he ha~ also joined Purushotham in executing the impugned
sale. The share of the sons of Sriramulu could not have been
Ii
11lienated by Pun~shoth~m for dishaq~in~ his antecedent qel;it,
136 SUPREME COURT REPORTS [ 1982] 2 s.c.R.

A In Sidheshwar Mukherjee v. Bhubneshwar Prasad Narain Singh
and Ors.(1) this Court laid down the law in the following terms:

"A person who has obtained a decree against a
member of a joint Hindu family for a debt due to him is
B entitled to attach and sell the inerest of his debtor in the
joint family property, and if the debt was not immoral or
illegal, the interest of the judgment debtor's sons also in the
joint family property would pass to the purchaser by such
sale even though the judgment-debtor was not the Karta of
the family and the family did not consist of the father
c and sons only when the decree was obtained against the
father and the properties were :sold. It is not necessary that
the sons should be made parties, to the suit or the execution
proceedings.
....

The rule laid down by the Privy Council in Nanomi
D
Babuasin' s case(2) is not restricted in its application to cases
where the father was the head of the family and in that
capacity could represent his sons in the suit or execution
proceedings, for subject to the right of the sons to assert
and prove that the debt contracted by their father was
E not such as would. be binding on them under the Hindu
law, the father, even if he was not the Kart a could repre-
sent his sons as effectively in tbe sale or execution pro-
ceedings as he could do if he was the Karla himself.

In Brij Narain v. Mang/a Prasad and Ors.(3) the Judicial
F Committee, upon a consideration of the authorities, laid down the
following propositions : --
"(!) The managing member of a joint undivided
estate cannot alienate or burden the estate qua manager
except for purchases of necessity; but (2) if he is the
G father, and other members are his sons, he may by
incurring debt, so long as it is not for an immoral purpose,
Jay the estate open to be taken in execution proceedings

H (1) [1954) SCR 177.
(2) 13 I.A. 1.
(3) L.R. 51 lA 129.
PRASAD v. V.G. MUDALIAR (Misra, J.) 137

upon a decree for payment of that debt. (3) If he pur- A
ports to burden the estate by a mortgage, then unless that
mortgage is to discharge an ant,cedent debt, it would not
bind the estate. (4) Antecedent'debt means antecedent in
fact as well as in time, that is to say, that the debt
• must be truly independent and not part of the transaction
impeached. (5) There is rule that this result is affected by B
the question whether the father, who contracted the debt
or burdens the estate, is alive or dead."

In Shanmukam v. Nachu Ammal(1) a Division Bench of the
Madras High Court laid down :
c
- "The doctrine of pious obligation of a son to pay
his father's debts cannot be restricted to cases where
father also happens to be the manager. If this limitation
was well founded it would also follow that the father's
1

power of disposing of the son's share for the satisfiction of
; his own debts must be likewise limited. There cannot be D
; any justification for such limitation when it is remembered
that the son's obligation to pay his father's debts was
' under the original Smritis independent of possession of
, assets of joint family property. It depends purely upon
the relationship of father and son. It is only by case law
developed during the early part of nineteenth century E
and by statute law in the Bombay Presidency that the
liability of the son for father's debts was limited to assets
and to joint family pn:iperty. The true basis of the obliga-
tion therefore is the relationship of father and son and

- not the accident of the father being the manager of the
joint Hindu family." F
There is, however, another condition which must be satisfied
before the son could be held liable, i.e., that the father or the
manager acted like a prudent man and did not sacrifice the property
for an inadequate consideration. In Dudh Nath v. Sat Narain
Ram( 2) a Full Bench of the Allahabad High Court observed : G
"In order to uphold an alienation of a joint Hindu
family property by the father or the manager it is not
only necessary to prove that t!Wfl( was legal necessity but

(!) AIR 1937 Mad. 140.
12) A.I.R. 1966 AU. 315.
138 SUPREME COURT REPORTS (1982] 2 S.C.R.
also that the father or the father or the manager acted like
a prudent men and did not sacrifice the property for an
inadequate consideration. A Hindu father or a manager
of a joint Hindu family is expected to act prudently.
However great the necessity may be, in the joint family
property is sacrificed for an inadequate consideration it
B would be highly imprudent transaction and it would be a
case where, though for necessity, the father or the guardian
has not acted for the benefit of the estate or the members
of the joint Hindu family. Thi~ father or the manager is
not the sole owner of the prope1 ty. In fact until the
partition takes place even his share does not stand demar·
c cated. The ownership vests in all the co-parceners taken
together as a unit. The father and the manager, there·
fore, only represent the co·pa.rceners. Consequently the
co-parceners stand bound by the act of the father or the
-
manager of the family only to the extent the act is
prudent or for the benefit of the co-parceners or the
D estate."

In the instant case on the finding arrived at that the .considera-
tion for the sale deed Ext. B-5 was thoroughly inadequate, the sale
cannot be upheld.

E For the reasons given above th~: appeals must succeed. They
are accordingly allowed and the judgment of the High Court
dated 6th November, 1968 is set aside, and that of the trial court
is restored. In the circumstances of t:he case the parties should bear
their own costs.

F
N.V.K, Appeal~ allowed,
-