1926 (12) TMI 4 - HC - Indian Laws

Summary

Issues:
1. Validity of equitable mortgage on joint family property
2. Nature of debts and purpose of borrowings for equitable mortgage

Issue 1: Validity of equitable mortgage on joint family property
The respondent filed a suit to recover an amount under an equitable mortgage created by deposit of title-deeds. The mortgage was made to secure an amount advanced to a partnership business involving defendants 1 to 3. The property mortgaged belonged to defendant 1 or his family, and defendant 4 was added as a party to determine the binding nature of the mortgage on his share in the property. The trial found the mortgage binding on defendant 4's share, leading to the appeal.

The appellant contended that the mortgage was not binding on defendant 4's share as the property was joint family property and defendant 1 did not have the right to alienate it for purposes not binding on the family. The appellant argued that the debt was not yet payable as it was for goods purchased on credit. However, the court rejected this argument, stating that a debt may be due and payable even if not demandable. The court also distinguished trade debts from other debts, emphasizing the enforceability of such debts.

Issue 2: Nature of debts and purpose of borrowings for equitable mortgage
The appellant further argued that the amount sought to be recovered was not the original debt but subsequent borrowings for which there was no evidence of being used to pay off antecedent debts. The appellant claimed that payments made by defendant 1 should have reduced the original debt, and without evidence of the purpose of subsequent borrowings, the mortgage could not be supported. However, the court found that the original contract intended the mortgage to secure a floating account, where subsequent payments did not reduce the liability permanently.

The court also considered the broader ground for supporting the judgment, focusing on the family business aspect. It was established that defendants 1 and 4 belonged to a trading community, and the cessation of the family business for a few years did not disqualify defendant 1 from borrowing for the business. The court emphasized the interdependence of family estate and business in Hindu law, rejecting a rigid interpretation of family trade or business. The judgment upheld the trial court's decision, stating that if the business was a family business, defendant 1 had the right to borrow for its continuation, thus dismissing the appeal.

In conclusion, the judgment affirmed the validity of the equitable mortgage on joint family property and clarified the nature of debts and borrowings for such mortgages in the context of family businesses under Hindu law.