1972 (7) TMI 115 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the receiver is a necessary party to the suit.
2. Effect of the orders dated November 23, 1955, and February 18, 1960, passed by the Insolvency Court on this case.
3. Proper valuation of the plaint for purposes of court-fee.
4. Maintainability of the suit in its present form.
5. Whether the suit is collusive.
6. Locus standi of the plaintiffs to sue.
7. Whether the property in suit is joint Hindu family property.
8. Whether the mortgage in question was for legal necessity.
9. Whether the suit is barred by time.
10. Relief.

Issue-wise Detailed Analysis:

1. Whether the receiver is a necessary party to the suit:
The court held that the receiver was not a necessary party. It reasoned that necessary parties are those whose absence prevents the court from passing an effective decree. Since the suit questioned the legality of the charge and not the assets of the insolvent, the receiver was not essential.

2. Effect of the orders dated November 23, 1955, and February 18, 1960, passed by the Insolvency Court on this case:
The court concluded that the orders were final between the creditors and the estate of the insolvent. However, based on the Supreme Court's pronouncements, Hindu sons could challenge the mortgage unless the mortgagee proved it was for legal necessity. The court overruled the submission that the respondents had to prove the mortgage debt was tainted with immorality.

3. Proper valuation of the plaint for purposes of court-fee:
The trial court held that the plaint was properly valued for court-fee purposes.

4. Maintainability of the suit in its present form:
The trial court found the suit maintainable in its present form.

5. Whether the suit is collusive:
The court found the suit to be collusive. It noted that the family was a trading family, and the mortgage was executed by Brij Lal and his adult sons. The absence of Brij Lal, Sudh Parkash, and Ram Gopal from the witness-box led to a presumption under Section 114 of the Evidence Act that the loan was utilized for family business, indicating collusion.

6. Locus standi of the plaintiffs to sue:
The trial court held that respondents Nos. 1 to 5 had the right to file the suit, while their two sisters and mother were incompetent to do so.

7. Whether the property in suit is joint Hindu family property:
The trial court held that the house belonged to the joint Hindu family.

8. Whether the mortgage in question was for legal necessity:
The court concluded that the mortgage was for legal necessity. It observed that the family had extensive business transactions, and the absence of key family members from the witness-box supported the presumption that the loan was used for family business.

9. Whether the suit is barred by time:
The court held that the suit was barred by limitation under Article 120 of the Limitation Act. The period of limitation started from the date when the right to sue accrued, which was when the mortgage deed was executed.

10. Relief:
The appeal was allowed concerning respondents other than Basti Ram and his legal representatives. The court found the suit collusive, the mortgage for valid legal necessity, and the suit barred by time. The appellant was entitled to costs throughout.

Conclusion:
The court dismissed the suit filed by the respondents, except for Basti Ram and his legal representatives, based on findings of collusion, valid legal necessity for the mortgage, and the suit being barred by limitation. The appeal was allowed, and the appellant was awarded costs.