1981 (12) TMI 164 - SC - Indian Laws

Supreme Court Upholds Trial Court Ruling on Sale Deed Validity

PRASAD Versus V. GOVINDASWAMI MUDALIAR

The Supreme Court set aside the High Court's decision and upheld the trial court's ruling in a case concerning the validity of a sale deed dated 22nd ... - Issues Involved:1. Validity of the sale deed dated 22nd August 1955 (Ext. B-5).2. Adequacy of consideration for the sale deed.3. The genuineness of debts under promissory notes (Ext. B-13 and Ext. B-14).4. The pious obligation of sons to discharge antecedent debts.5. Prudent management by the father or manager in the alienation of joint family property.Detailed Analysis:1. Validity of the Sale Deed Dated 22nd August 1955 (Ext. B-5):The sale deed was executed by K.V. Purushotham and K.V. Sriramulu in favor of the respondents to discharge debts incurred by Purushotham. The plaintiffs challenged the sale deed on grounds of it being nominal and executed for a collateral purpose to stave off creditors, with an understanding for reconveyance. The trial court found the sale deed to be true but partly supported by consideration and liable to be set aside as an imprudent transaction. The High Court, however, upheld the sale as genuine and binding, concluding that the debts mentioned were antecedent and the sale was made for a reasonable price.2. Adequacy of Consideration for the Sale Deed:The trial court concluded that the property, including land and house, was worth between Rs. 35,000 to Rs. 50,000, but was sold for a grossly inadequate price of Rs. 16,500. The High Court disagreed, stating that the sale price was reasonable. The Supreme Court, agreeing with the trial court, found the consideration to be inordinately inadequate, noting that the property was fertile and capable of yielding significant income, and thus the sale for Rs. 16,500 was imprudent.3. The Genuineness of Debts Under Promissory Notes (Ext. B-13 and Ext. B-14):The trial court found that the debts under Ext. B-13 and Ext. B-14 were fictitious, supported by evidence such as Ext. B-54, a letter revealing the creation of nominal bonds to stave off creditors. The High Court discarded this letter, but the Supreme Court reinstated its credibility, noting that it was written by Purushotham and corroborated by other evidence, thus supporting the trial court's finding of the debts being fictitious.4. The Pious Obligation of Sons to Discharge Antecedent Debts:Under Hindu law, sons are obligated to discharge their father's antecedent debts unless tainted with immorality or illegality. The Supreme Court noted that Purushotham's debts from his lungi business were antecedent and binding on his sons, as they were not alleged to be immoral or illegal. However, this did not apply to the sons of Sriramulu, as the business was Purushotham's personal venture, and Sriramulu's sons were not bound by the debts.5. Prudent Management by the Father or Manager in the Alienation of Joint Family Property:The Supreme Court emphasized that the father or manager must act prudently and not sacrifice the property for inadequate consideration. The trial court found that selling almost the entire joint family property for Rs. 16,500, without making provisions for all outstanding debts, was imprudent. The Supreme Court agreed, noting the sale was nominal and for a collateral purpose, and thus could not be upheld.Conclusion:The Supreme Court allowed the appeals, setting aside the High Court's judgment and restoring the trial court's decision. The sale deed dated 22nd August 1955 was found to be nominal, inadequately supported by consideration, and executed for a collateral purpose. The debts under Ext. B-13 and Ext. B-14 were fictitious, and the sale was imprudent, thus not binding on the sons of Sriramulu. The parties were directed to bear their own costs.