1973 (8) TMI 162 - SC - Indian Laws

Summary

Issues Involved:
1. Authority of Manorama to execute mortgages.
2. Validity of the sanctions obtained by Manorama.
3. Extent of the minor's interest in the properties.
4. Fraudulent suppression of the will by Manorama.
5. Inherent powers of the High Court under the Guardians and Wards Act, 1890.
6. Restitution of benefits received from voidable transactions.

Issue-wise Detailed Analysis:

1. Authority of Manorama to Execute Mortgages:
Manorama, appointed as the guardian of her minor children by the High Court of Madras, executed several mortgages to raise funds. The respondents contended that Manorama had no authority to execute the mortgages and that the sanctions were obtained by practicing fraud upon the court. The court noted that the orders appointing her as guardian did not specify any limitation on her authority to mortgage the properties. The court concluded that the orders sanctioning the mortgages authorized her to mortgage the properties and not any particular interest therein.

2. Validity of the Sanctions Obtained by Manorama:
The respondents argued that the sanctions obtained by Manorama were invalid as they were obtained by fraud and without disclosing the existence of Raju's will. The Full Bench held that an order under Section 31(2) of the Guardians and Wards Act can be relied on by an alienee as a substitute for an honest enquiry, but it is open to the minor to challenge the alienation if the alienee was on notice of defects or did not act bona fide. The court found that the orders of sanction were obtained by fraud and were, therefore, invalid.

3. Extent of the Minor's Interest in the Properties:
The High Court initially held that the mortgages were valid only in respect of one-half interest in the properties, as Manorama was appointed guardian only in respect of that half. However, the Supreme Court found that the order appointing her as guardian did not show any limitation and that a purchaser could not be expected to go behind the order. The court concluded that Manorama was appointed guardian of the entire interest in the properties.

4. Fraudulent Suppression of the Will by Manorama:
The respondents contended that Manorama deliberately suppressed the execution of Raju's will, which imposed restrictions on her power of alienation. The court agreed that Manorama did not disclose the will when applying for sanctions and that the court had no occasion to pass an order in writing enabling her to dispose of any property of the minor notwithstanding the restrictions imposed by the will.

5. Inherent Powers of the High Court under the Guardians and Wards Act, 1890:
The appellants argued that the High Court had inherent jurisdiction to appoint a guardian and determine his powers apart from the provisions of the Act. The court acknowledged that while the High Court has inherent powers, the principle underlying Section 28 of the Act, which requires the court to be apprised of any restrictions imposed by a will, should still bind the High Court.

6. Restitution of Benefits Received from Voidable Transactions:
The court held that the orders of sanction, though obtained by fraud, were not void but voidable. The appellants advanced the amounts bona fide and there was no finding that there was no necessity. The court noted that it is just and proper that as a condition for setting aside a disposal of immovable property made in contravention of Sections 28 or 29, there must be restitution of the benefits received.

Conclusion:
The Supreme Court set aside the decree of the High Court and passed a decree directing the respondents to pay the appellants the principal amount due under the two mortgages together with interest. The amount decreed will be a charge on the sale proceeds of one of the properties and on the entire interest in the other property under the mortgages. The appeal was allowed to the extent indicated, and the parties were ordered to bear their own costs.